You’ve probably heard the news by now. The Cupertino-based computer company has released a digital credit card – named the Apple Card – that Apple claims was built around the concepts of simplicity, transparency, and privacy.
Earlier this year, Apple CEO, Tim Cook, announced their new Apple Card product at a special event at their Cupertino headquarters. The anticipation for details regarding their new credit card with Goldman Sachs was highly anticipated and closely watched. The financial world is buzzing with excitement to see if Apple continues to innovate in the FinTech space, but that remains to be seen.
Since the big announcement, Apple enthusiasts have patiently waited on the sidelines for the opportunity to apply and use the new digital credit card.
Before I share whether I think the card is worth it, here’s what you need to know about it.
What is the Apple Card?
The Apple Card is designed for the iPhone and it integrates directly with the hardware and software on the phone for seamless functionality. In fact, they’ve revolutionized some processes which we all take for granted. You sign up for the card directly on your phone and if approved, you’ll be able to start using it within minutes. Say goodbye to the customary two-week waiting period.
If you are reading this on your iPhone and are ready to sign up, simply open the Wallet app and you’ll see the option to apply. You’ll need to make sure you have your iOS updated first though.
The Apple Card will live in your Apple Wallet and will be accepted wherever Apple Pay is accepted.This means that it will work with all of your existing digital payments for things such as Lyft, Apple subscriptions, and other online purchases. However, Apple Card customers will also receive a titanium laser etched card to be used at physical merchants. Apple selected Mastercard as their payment network which means the titanium version of the card will be accepted virtually everywhere.
Honestly, I think the titanium card is simply a gimmick since the whole point of the card is that it simply lives on your phone.
A few of the Apple Card’s features
A card with no fees!
The best feature of the card is that they’ve done away with the customary fees. This means no late fees, no annual fees, no international fees, or over-limit fees. This will help consumers stay out of debt.
In other words, Apple is not entering the credit card business to make money off of the fees. They’ll rely on the transaction fees and usage of Apple cash.
Lowish interest rates
They will also eliminate penalty interest rates and strive to offer the lowest interest rates in the industry, ranging from 12.99% to 23.99% APR. Sadly the lowest rates in the industry are still insanely high. And honestly, they aren’t much different than what other companies offer. Lame.
2% Cash back for most purchases
When it comes to rewards, Apple has aimed to make their rewards program easy to understand. No points or other gimmicky perks. All you need to know is one phrase: cash back. It revolves around the Apple Cash Card, into which your cash back will automatically be added. The Apple Card earns 2% cash back on all ApplePay transactions, 1% cash back on all transactions if you use the physical Apple Card, and 3% cash back on all purchases made at Apple.
Daily Cash is the name of the Apple Card rewards program and cash back will get paid directly to your Apple Cash card on a daily basis. You can spend it wherever you use Apple Pay, send money to friends via iMessage, or pay down your Apple Card balance. You’ll get your cash back on a daily basis.
Some credit cards offer higher rewards, but I personally don’t do the best job of redeeming points for flights or hotels, so this is attractive. Show me the money!!
If you need customer service, they’ve also simplified the process so you no longer have to call your bank for help. Apple Card customer service will be integrated with the iPhone so you can get customer service directly on the phone via iMessage. I have yet to try this feature and assess whether it will work as advertised so stay tuned.
Do you even NEED another credit card?
It’s worth mentioning that you should think carefully whether getting another credit card makes sense for you. If you don’t have excellent credit, you’re likely better off not applying so you can focus on rebuilding your credit first.
After you’ve made purchases, Apple Card also makes it easier than ever to see how and where you spent your money. The Wallet App automatically categorizes your spend in real time so you can see exactly how much you are spending over time. To further differentiate themselves from competitors like Chase and Bank of America, Apple Card will use technology to show merchant and transaction data on invoices that is easy to understand, unlike the addresses and phone numbers that often get listed on traditional credit card statements.
Security is another strong selling point when it comes to Apple Card, as every purchase is verified with FaceID or TouchID. If you have been the victim of credit card fraud then this is a huge selling point.
Apple also claims that they won’t know what you bought, where you bought it or how much you bought it. So even if they get hacked or compromised, your data is protected. Pretty neat.
All categorization shown in the Wallet App takes place locally on your phone and not on Apple’s servers. The firm also stated that Goldman Sachs will never sell your card data or personal information to third parties, which is a practice that consumers have grown weary of. Additionally, the physical Apple Card will not contain a credit card number, CVV code, expiration date or signature, although those details will live in the Wallet App.
Rewards are a weakness
If the card has any weaknesses, it has to be the rewards. Cards like the Chase Sapphire Reserve offer travel perks like access to lounges, the Global Entry Trusted Traveler program and an annual travel credit. Other cards on the market offer cash back on all purchases that rival or surpass that of the Apple Card. But again, Apple is betting that the seamless customer experience will be more than offset any shortcomings in their rewards program.
It’s clear that Apple has its eyes set on dominating the digital payments space. The company announced today that it is on pace to surpass 10 billion payment transactions this year and that 70% of merchants in the U.S. accept ApplePay.
So is the Apple Card worth it?
Honestly, unless you spend a TON of cash at Apple, not really. For example, you are better off focusing on saving money by opening a high interest savings account!
I will be getting one to test it out and see if the experience itself is amazing, but from a purely financial standpoint I have little to lose since it doesn’t have an annual fee.
If you are an Apple fanatic and spend thousands of bucks on their products then the 3% cash back is pretty nice to have. You’re likely better off shopping at B&H Photo online and getting their card that saves you sales tax, but hey, no card is currently as sexy as the Apple Card.
This article was originally published on The Money Mix and re-published with permission.
Camilo is a personal finance expert who was raised in poverty by a single mother and had to learn everything about personal finance on his own. In addition to writing for his personal finance site,The Finance Twins, he has been featured on Forbes, Business Insider, CNBC, US News, The Simple Dollar and other top publications. Camilo began his career as an investment banking analyst on Wall Street at J.P. Morgan. He has a master of business administration (M.B.A.) degree from Harvard University and a Bachelor of Science in finance from the Wharton School of Business at the University of Pennsylvania. You can contact Camilo via Instagram @thefinancetwins.