For a while we’ve known Apple’s plans to launch a credit card, and today the full details of the card have been revealed, with the card expected to be available this summer.
To give a bit of a teaser, the card is exactly what I expected — it’s not great, though it has a couple of unique features, and I imagine the card will be very popular given Apple’s loyal following. Apple could start selling fax machines and people would be lining up for days to get their hands on one.
Details of the new Apple Card
Apple is emphasizing ease of use and privacy as the key features of the card. iPhone users will be able to apply directly from their phone, and receive a virtual card number immediately.
Beyond that, Apple will leverage their data systems to help categorize and label transactions, which they claim will lead to customers living a “healthier financial life” and being better able to understand their spending habits.
Apple Card rewards structure
Apple will be providing rewards in the form of cashback, which can be earned at the following rates:
- 3% on all purchases made directly with Apple, including at Apple Stores, on the App Store and for Apple services
- 2% when using the Apple Card with Apple Pay
- 1% on physical card purchases made outside of Apple Pay
That’s a decent enough return on Apple and Apple Pay purchases, but there are plenty of rewards cards offering 2% back these days, so the rewards structure of the Apple Card isn’t that interesting to me.
What makes the Apple Card different
While the Apple Card seems to fundamentally be a co-branded cashback card, there are a few intriguing differences.
One of the selling features of the Apple Card is that rewards will post relatively “immediately.” This isn’t entirely unique — my Capital One miles usually show up in my account on the same day that I make a purchase — but there are still many issuers and programs that take at least a statement cycle to post.
What is interesting about the Apple Card is that the accumulated “Daily Cash” can not only be used for a statement credit (which is common), but because it is integrated with Apple Pay, cardholders will be able to use their cash rewards for other Apple Pay activities, including sending funds to other iPhone users through Messages.
I’m sure nothing could possibly end poorly with that functionality. 😉
Security, or hassle?
The Apple Card is obviously focused on mobile payments, and wants to encourage cardholders to use Apple Pay for all transactions.
For retailers that don’t offer Apple Pay, however, a physical card will still be produced. The card will apparently be made not just of metal, but “titanium,” and won’t have any account details on the card:
With no card number, CVV security code, expiration date or signature on the card, Apple Card is more secure than any other physical credit card.
As someone who seems to have their card data compromised fairly often, I appreciate the idea behind not having any account information on the physical card. From a security perspective, that seems smart.
But this is another feature that I see being potentially problematic in practice, as many cashiers are trained to match the last four digits of the physical card against the swipe-generated data. Still, given the paltry 1% return on purchases made outside of Apple Pay, this isn’t really a card I’d recommend using in those cases anyway.
Apple is advertising that the card will have no fees associated with it, including no annual fee, no late fees, no foreign transaction fees, and no over-the-limit fees. They say that their goal is also to provide interest rates that are among the lowest in the industry.
My take on the Apple Card
For someone willing to put a bit of effort into maximizing credit card rewards, I think there’s almost no reason to get this card. There are better cards out there in just about all categories (as I’ll outline below).
That being said, I have to give Apple credit for at least putting some thought into the card with the instant rewards, no late fees, no foreign transaction fees, and more.
If this card were being issued by anyone else, I can’t imagine it would be popular. However, Apple has a massive, loyal following, and I imagine this card will take the US by storm, simply because it’s made by Apple.
But there really isn’t anything unique here. It’s not like there aren’t other cards offering nearly instant rewards, and there are plenty of cards you can apply for directly on your iPhone, and there are lots of cards with no annual fees and even no foreign transaction fees.
Alternatives to the Apple Card
If you’re a savvy consumer, you’ll potentially be earning a lot more rewards with other cards. For one, the card’s 1% cashback on non-Apple/Apple Pay purchases simply isn’t competitive, as cards like the Citi® Double Cash Card offer 1% cash back on every purchase, and then an additional 1% cash back when you pay for those purchases. The card has no annual fee, so is an excellent option.
Otherwise, something like the Uber Visa Card offers 4% back on dining, 3% back on hotels and airfare, 2% back on online purchases, and 1% back on everything else, and has no foreign transaction fees and no annual fee.
Of course if you’re willing to get more than one credit card and are interested in travel rewards, there’s so much more value to be had. I consider the best credit card duo to be the Chase Sapphire Reserve® Card and Chase Freedom Unlimited®, as you’ll earn 3x points on dining and travel, and 1.5x points on all other purchases, with points being redeemable for 1.5 cents each towards the cost of a travel purchase.
Apple’s new co-branded credit card is more or less what I expected. It offers 3% cashback on Apple purchases, 2% cashback on Apple Pay purchases, and 1% cashback on all other purchases. It’s essentially a way to get you to spend more with Apple, and to increasingly use Apple Pay for purchases.
Then it offers some cool perks like instant rewards, no annual fee, no foreign transaction fees, and a cool card without any numbers on it.
When you consider that this card is being issued by Apple, I imagine it’s going to be very popular.
What do you make of Apple’s new credit card?