Published in: Credit Cards | March 26, 2019
Is the Apple Credit Card Worth It?
We finally have some details behind Apple’s new credit card, so here’s what you need to know.
It’s been known for some time that Apple and Goldman Sachs had planned to team up on a new credit card, but as is the case with most yet-to-be-formally-announced Apple products, we didn’t know too many details.
However, at an event on March 25, 2019, Apple officially announced its new credit card and the details behind it. Here’s a rundown of the features, what could make the card valuable to consumers, the potential drawbacks of the card, and some alternatives consumers might want to consider.
The details behind the Apple credit card
We know that the new credit card is called the Apple Card (not that the name is a big surprise), and it will be a Mastercard product. Customers can sign up for the card directly through their iPhone, and it will be linked to the company’s Apple Pay mobile payment platform.
Even though it’s primarily designed to integrate with Apple Pay, there will be a physical card as well. The card is titanium and only has the cardholder’s name on it -- no card numbers, expiration date, or CVV number.
As far as rewards go, the Apple Card will pay 2% cash back when used for Apple Pay transactions, and 3% on purchases made directly from Apple. The physical card won’t have quite as attractive of a rewards rate, as purchases made with it only earn 1% back..
However, it’s important to point out that Apple Pay is now accepted at over 70% of U.S. retailers, so cardholders may not have to use the physical card all that much. The card won’t have any fees whatsoever -- including annual fees, foreign transaction fees, or even late payment and over-limit fees.
Not only are there no late fees, but the Apple Card won’t switch customers to a penalty APR if they miss a payment.
Finally, Apple promises that its privacy focus will extend to the credit card, saying that the company (or Goldman Sachs) will never know what you buy or how much you pay for it, and will never sell your data to third parties.
What stands out
There are a few big differentiators that could make the Apple Card particularly appealing to consumers. From what we know so far, here are some of the most attractive features:
- Strong rewards rate on Apple purchases -- The 3% cash-back rate on Apple purchases is likely to appeal to customers who love Apple products and subscribe to the company’s services. For example, if you purchase $2,000 of Apple hardware and spend $250 on services in a year, this translates to $67.50 in cash back.
- 2% back when using Apple Pay -- The industry-leading cash-back credit cards offer 2% cash back on purchases, so for people who regularly use Apple Pay, this is a very competitive rewards rate.
- No fees at all -- There are other credit cards with a 2% rewards rate and no annual fee. And not charging foreign transaction fees is a nice, but not uncommon, feature among today’s leading credit cards. However, the additional perk of no late or over-limit fees, and no penalty APR, is a unique differentiator that could make the card appealing to fee-adverse consumers.
- Privacy-focused product -- Apple is a company that is known for its focus on consumer privacy, and this could resonate with credit card customers. Apple is protecting sensitive information -- I don’t know of any other credit card that only has the user’s name printed on it.
Potential shortcomings and what could be improved
There’s no such thing as a perfect credit card. There are some potential drawbacks to the Apple Card that consumers should be aware of:
- The physical card has a really low rewards rate -- While about 70% of merchants now accept Apple Pay, that still leaves 30% of merchants that don’t. Even many iPhone users don’t use Apple Pay when making purchases. The card’s 1% rewards rate when making purchases with the physical credit card is rather low compared to what is readily available from some competing products and may make it undesirable to use the card for everyday purchases.
- No introductory bonus or promotional financing -- While it’s certainly possible that Apple and Goldman Sachs will announce some sort of introductory financing or promotional financing upon the Apple Card’s launch, they haven’t said anything about it yet. For example, if there’s 0% APR financing on all Apple product purchases, it could go a long way toward getting Apple users to adopt the card.
Who should apply for the Apple credit card?
People who spend a lot of money on Apple products or who regularly use Apple Pay when making everyday purchases may find the Apple Card to be a good fit. It’s also a good card to consider for people who don’t want to have to worry about any fees, and who may occasionally forget to make their credit card payments on time.
How to apply
The Apple Card will be available in the U.S. in summer 2019, although a specific release date is not available as of this writing. Once it’s available, Apple says iPhone users will be able to sign up for the card directly through their devices and will be able to use the card (via Apple Pay) within minutes of approval.
Alternatives to consider
Depending on your specific needs, there could be other credit cards that are better for you.
For one thing, there are cash-back credit cards that offer 2% back on all purchases, not just app-based or online transactions. If you regularly use a physical credit card, as opposed to Apple Pay, to pay for purchases, you may want to consider one of these instead.
Furthermore, there can be tremendous value in 0% intro APR offers if you’re planning to make a large purchase and want the flexibility to pay it off over time. For example, if you want to buy a $2,000 iMac computer, being able to stretch repayment out over a period of 12 months or more with no interest can be far more valuable than a 3% cash-back rate.
The Apple Card’s reward structure isn’t one of the best in the industry. There are cash-back credit cards with similar reward rates that also include perks like 0% intro APRs on purchases and balance transfers, and the physical card’s 1% reward rate is actually quite un-competitive.
Having said that, with no annual fee, there’s no reason consumers can’t get the card to use exclusively on Apple and Apple Pay purchases, as these are the areas where it offers the most value.
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