Apple has unveiled a new credit card that it hopes will revolutionize the personal finance industry.
Dubbed Apple Card, the credit card is focused on preserving personal security and reducing fraud, and aims at offering some of the best budget and finance tracking in the industry. The card also offers rewards in the form of Daily Cash back.
In sum, Apple is hoping the Apple Card completely disrupts the credit card business. But how is the Apple Card really different, when is it coming and what’s the fine print? Here’s everything you need to know, including how Apple Card stacks up against other credit cards.
Apple Card Release Date
Apple Card is already available to use for some participants in an invitation-only trial. If you didn't receive an early invite, you'll have to wait until the end of August to apply.
When you apply to other credit cards, it can often take several days to actually get it in the mail and start using it. But Apple is hoping to change that with Apple Card.
If everything goes well, you can start using the Apple Card virtually through Apple Pay right away. Apple will then mail a physical titanium Apple Card to you for use in places where Apple Pay isn’t available.
Daily Cash: Rewards in Real Time (with a Catch)
With traditional credit cards, there are plenty of rewards you can take advantage of when you buy items. But there’s often a lag between your spending and the rewards you can use in the future.
With Apple Card, Apple is making its rewards available immediately and is calling it Daily Cash. How much you’re rewarded is based on how you purchase.
So, if you buy anything from Apple, including at its retail stores, online, in the App Store, or in any other digital Apple marketplace, you’ll get 3 percent Daily Cash back on your purchase.
When you buy something at a store with Apple Pay connected to your Apple Card, you’ll get 2 percent back on your purchase. So, anywhere Apple Pay is offered, simply choose your Apple Card as your method of payment and complete your purchase with Apple Pay and you’ll get 2 percent back.
If you pull out the Apple Card and make a payment with that, you’ll get 1 percent back on your purchase in the form of Daily Cash.
As soon as you make purchases and get rewards based on how you pay, those rewards are deposited into your Apple Pay Cash account. You can then use that cash to send to friends or pay down your Apple Card balance.
If a friend sends you cash via Apple Pay to reimburse you for paying for a bill at your local bar, it’ll go to your Apple Pay Cash balance.
Tracking Your Spending
Apple is working to make it easier for you to visualize how you’re spending with your Apple Card — and where.
When you want to see your spending habits, you can load the Wallet app and immediately see your spending patterns over weeks or months. You can also see your spending trends over time to see if you’re overdoing it.
Apple is also using machine learning technology to identify where you’re buying your products from and categorize your purchases into things like food, entertainment, travel, and more. It even uses Apple’s Maps to help you pinpoint where you’ve been spending.
Help via Messages
If you’re having some trouble or you need some help using your Apple Card, you can quickly communicate with support representatives via iMessage. In fact, Apple said that you can send a quick text message to its customer service representatives and get issues addressed without ever needing to wait on a telephone.
Apple Card Fees and Interest
Apple Card’s most compelling feature might be its commitment to eliminating fees. Apple Card doesn’t have annual fees, late fees, international fees, or over-the-limit fees. In fact, if you miss a payment or just don’t feel like paying your bill one month, you don’t need to. While Apple won’t charge late fees, additional interest will accumulate on your unpaid balance.
Although Apple is saying that it’s planning to offer low interest on its card, the company’s fine print says that it anticipates a variable APR range of 13.24 percent to 24.24 percent, based on March 2019 rates.
Apple has criticized credit card companies for giving customers strange due dates for their payments. Apple Card will instead ask folks to pay on the last day of the month.
Apple also said that it will analyze a person’s balance and interest charges and provide an opportunity to make weekly or bi-weekly payments to pay more often and save on interest.
A Focus on Security
Apple is hoping that its Apple Card is viewed as the most secure credit card on the market.
In order to achieve that, Apple said that it will create a unique device number for your Apple Card that will then be encrypted and live inside the Secure Element inside your iPhone. That means no retailers will be able to see your name, credit card number, or other identifying information when you make a purchase. Better yet, Apple will not even know what you buy.
When you make a purchase, Apple Card will create a unique, one-time code that authorizes the purchase. And in order to verify a purchase, you’ll need to use either Face ID or Touch ID to confirm your identity. Apple says it’ll reduce theft by not allowing someone who steals your iPhone to also make a purchase with your Apple Card.
We've also learned that you can refresh the Apple Card's credit card number within the Wallet app if you're very concerned about privacy and that you can even use a different number for different merchants.
Physical Apple Card
The physical Apple Card is titanium and uses with laser-etching for your name and Apple logo. There’s also a chip in the card that can be inserted into payment terminals when you’re at a store.
There’s no credit card number of CVV number, so even if someone obtains your actual card, there’s nothing they can do with it — except give it back. And if they don’t give it back, you can request a replacement card immediately from Apple Wallet on your phone.
In a somewhat disappointing move, Apple Card isn’t designed to be contactless like many of today’s credit cards that can send your information to the payment terminal without ever being inserted.
Instead, you’ll need to insert your Apple Card into a payment terminal in order to complete your purchase. It’s a bit of an annoyance, for sure, but that’s likely due to Apple trying to encourage users who want contactless payments to opt for Apple Card on Apple Pay instead of the physical Apple Card.
Of course, there is some fine print here that you’ll want to keep in mind before you get Apple Card.
For one, the Apple Card is only available upon credit approval, so you will need to provide your Social Security number and take a hit on your credit report before you can sign up. Apple Card also comes with a credit limit based on your credit worthiness.
As mentioned above, Apple will be charging interest that, as of this writing, could range between 13.24 percent and 24.24 percent.
What About Goldman Sachs and Mastercard?
The secret behind-the-scenes ingredient in Apple Card is Goldman Sachs. The gigantic financial services company hasn’t done much in the consumer credit market, but is jumping in with Apple.
According to Apple, Goldman Sachs will help with support and has agreed not to sell any consumer data for marketing or advertising purposes.
Mastercard is Apple’s other partner on the Apple Card venture. With help from Mastercard, Apple said, it can ensure that the Apple Card will work on Mastercard’s global payment network and work in many more places than where Apple Pay might not be available.
Apple Card vs. Other Credit Cards
So, how does Apple Card stack up to other credit cards? Well, it depends. For one, Apple is requiring its Apple Card holders to be iPhone owners. Other credit cards don’t have that limitation.
Aside from that, while Apple is quick to offer cash back rewards, its top offer of 3 percent is only available when you shop at Apple’s marketplaces. When you go with other retailers, it drops to 2 percent and 1 percent for Apple Pay and Apple Card transactions, respectively. Comparing an Apple Card purchase to that of other credit cards, 1 percent is a bit anemic.
In a report, Yahoo Finance found that Apple’s posted interest rates on Apple Card are not that appealing. As noted, the company anticipates a range of between 13.24 percent and 24.24 percent on interest. Yahoo Finance found that the average APR rate on credit cards in 2018 was 14.22 percent.
Speaking to CNBC in a recent interview, Bank of America technology and operations chief Cathy Bessant said that the company believes Apple Card is rather boring. She noted that all of the features have been offered elsewhere in other cards and didn’t think it was all that innovative.
Oddly enough, even analysts at Goldman Sachs — the same company Apple has partnered with on the Apple Card — said that Apple Card is a bit ho-hum.
"Even though Apple Pay is becoming more available, we would still expect a large percentage of transactions to be done at the 1 percent return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great," Goldman Sachs analysts wrote to investors, according to CNBC.
The appeal of the Apple Card appears to be its ease of use and how it can help you understand your spending habits so that you can take better control of your finances. The actual size of the awards are limited compared to some other credit cards, but the fact that the cash back is daily is a nice perk. Other benefits include the lack of fees and Apple’s focus on security and privacy.
Will Apple Card be worth the hype? We will update this guide with more information as we get closer to launch and are able to try out the service.
Image credits: Apple