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sorry a silly PAYG iphone question

Hi, i think this is probably a really silly question but I don't know the answer so I hope someone can help me.

I am looking at upgrading my current Orange PAYG phone and getting an iphone. I have worked out that I am still better off sticking with PAYG because I don't spend much on calls/texts etc. I am working out how much to top-up the phone when I purchase it (because it affects the free mins/text amounts etc) and so my question is.......

When you purchase apps through the apps store does the money come out of your phone credit or is it linked to an i-tunes account or something?? If it comes out my credit I think I will top-up more the first month because I have a list of apps I already want!
SAHM Mummy to
ds (born Oct 2007) and dd (born June 2010)

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