Anybody Want a Free iPhone 6? (Hint: There's a Catch)

Citi Still Stressed
Mark Lennihan/AP

Has Citi (C) got a deal for you!

No, seriously. Has Citi got a deal for you? Because they certainly think they do, and it comes in the form of a pitch that's certain to grab eyeballs -- and maybe more than a few new credit card customers.

As described in the company's recent press release, co-authored by partner AT&T (T), if applicants for Citi's new AT&T Access More credit card purchase a new iPhone 6 (or other smartphone) by putting it on their card, after using the card for a few months they'll get a credit from Citi for the cost of the iPhone 6.

Abracadabra -- a free iPhone 6!

Terms and Conditions May Apply
But mind the fine print. As described on its website, Citi's "new phone offer" works like this:

  • Step 1: Apply for and receive an AT&T Access More Card issued by Citi.

  • Step 2: Buy a new smartphone from AT&T's website via a provided link, "at full price and with no annual contract." You can put your new phone on your card as your very first purchase, or you can wait to buy it later.

  • Step 2.1: Activate your new phone through AT&T and keep your account active for at least 15 days. (You'll have to pay all the usual service fees and taxes for phone service.)

  • Step 3: Use your new card to keep shopping until you've racked up $2,000 in purchases. Make sure to hit this limit within three months of opening your account.

  • Step 4: Once you've hit that $2,000 limit, you're golden. Citi will credit your card account for the cost of the phone -- up to $650.

"Um ... I'm Not Reading 'iPhone 6' Here Anywhere ..."

Don't worry about that. On AT&T's ordinary webpage for buying no-contract smartphones, there's no iPhone 6 listed (they top out at iPhone 5s, plus some nice Samsungs), but I've confirmed with AT&T by email that, yes indeed, Virginia, you can use the Access More card offer to get a new iPhone 6 as well. And according to Apple's (AAPL) website, the no-contract retail price of an iPhone 6 is $649, giving you one whole dollar of breathing room between the price AT&T will charge and the $650 that Citi will reimburse you through this offer.

Sounds Like a Good Deal. Is It?

If you're in the market for a new phone, and don't want the hassle of a contract, it is. Compare Citi's new phone offer to, for example, the most recent "bonus points" offer that's showing up on as of this writing. This is for the Chase Ink Cash Card from JPMorgan Chase (JPM).

Like the Access More deal, Chase requires you to spend a certain amount of money within a certain amount of time in order to earn a bonus. Unlike Citi's offer, however, Chase is requiring you to charge $3,000 within three months in order to earn a $300 cashback bonus. Put another way, Chase requires that you spend 50 percent more to get less than half the reward Citi offers.

True, not all card issuers are as stingy with bonuses as Chase is with this offer. (Not even Chase. They routinely post offers worth as much as $500 cash back, for example, on various cards.) But $650 in value for $2,000 in purchases? That's a 32.5 percent profit in just three months or less -- a very nice return on your investment. (Certainly more than you could earn by putting $2,000 in a Citi or Chase bank account.)

Mind the fine print

To make the most of Citi's offer, however, it's important to keep track of the details. For example: Don't get greedy. Citi says you can't apply for the $650 phone credit if you've opened or closed an Access More account in the past 18 months. Read between the lines, and this means you can use this offer to pick up a free iPhone 6 every 18 months. (Albeit, in 18 months, we may be up to an iPhone 8 -- and this offer might have expired.) Do make sure you wait the entire 18 months, though. Else you could find yourself stuck with an extra card you don't need -- but no extra phone to go with it.

Note, too, that the Access More card charges a $95 annual fee (with which come benefits such as three "ThankYou Points" earned for every $1 you spend on certain purchases). Arguably, this reduces the value of the "free" phone offer to $555 from $650.

This is in contrast to a similar Citi card, dubbed simply "Access," which charges no fee, and credits you at most two points for every $1 you put on the card. Importantly, though, the fee-less "Access" card isn't part of the free phone offer. To get the free phone, you need to sign up for the marquee product.

Or put another way, if you want a "free" phone, you'll need to both "Access More" -- and pay a bit more as well.

Motley Fool contributor Rich Smith has never owned an iPhone -- but now he's tempted to. He has no position in any stocks mentioned, but The Motley Fool recommends Apple, and owns shares of Apple, Citigroup, and JPMorgan Chase. Click here to check out our free report for one great stock to buy for 2015 and beyond.