A new kind of credit card, created by Apple, is coming out this summer. Apple Card claims to represent simplicity, transparency, and privacy– but here’s what Apple doesn’t want you to know.
According to Apple, the Apple Card completely rethinks everything about the credit card. It builds on the incredible ease and security that millions of people love about Apple Pay. And it’s the first card that actually encourages you to pay less interest. You can buy things effortlessly, with just your iPhone, or use the Apple‑designed titanium card anywhere in the world.
The power of iPhone. In a credit card.
Apple Card lives on your iPhone, in the Wallet app. And that makes all kinds of new things possible. You can sign up in no time and start using it right away with Apple Pay. For every purchase you make, you get Daily Cash. And it really is cash. So you can spend it however you want, right from your iPhone. Have a question? Just text. It’s that simple.
You’ll know so much more about your spending. At a glance.
See a charge you don’t recognize? Tap to pinpoint it on a map. Everything you buy gets a category and a color. Those same colors show up in your spend summaries. See lots of
Daily Cash. No points. No gimmicks.
When you buy something using Apple Card, you get a percentage of your purchase back in Daily Cash. Not a month from now, but every day. There’s no limit to how much you can get. And it goes right onto your Apple Cash card, so you can use it just like cash.3
Order some sneakers. Or send it to your bank account. Or put it toward your Apple Card bill. Or pay a friend back for brunch, right in Messages. Only
No fees. Not even the hidden ones.
We want to make it easier to pay down your balance, not harder. So Apple Card doesn’t have any fees. No annual, cash‑advance, over-the-limit, or late fees. No fees. Really. And our goal with Apple Card is to provide interest rates that are among the lowest in the industry.
The first credit card that actually encourages you to pay less interest.
Most credit card statements emphasize your minimum amount due. And if you pay just that, it costs you a lot in interest over time. Apple Card is different.
When you’re ready to make a payment, Apple Card estimates the interest you’ll wind up paying, based on any payment amount you choose. And it does it in real time, so you can make an informed decision about how much of your balance to pay down.6
A new level of privacy and security.
Apple Card is designed to make sure you’re the only one who can use it. All the advanced security technologies of Apple Pay — Face ID, Touch ID, unique transaction codes — are built right in. And the physical card has no numbers. Not on the front. Not on the back. Which gives you a whole new level of security. Learn more about Apple Card here.
Here’s everything Apple isn’t telling you about its new credit card
According to Jacob Passy with Market Watch, these flashy features may be hiding the truth behind Apple Card. For starters, many other credit cards come with better rewards, including the U.S. Bank USB, +0.03% “Altitude Reserve Visa Infinite” card, which pays back 3% on all transactions completed via mobile
Nevertheless, the card still seems poised to attract the attention of Apple devotees — those people who have the latest Macbook, iPhone and Apple Watch and are members of the device upgrade program.
But once you get past the splashy features, there’s a lot Apple isn’t telling consumers about its new credit card.
Here’s what you should watch out for:
Apple wants you to use mobile payments
OK, maybe this isn’t really a secret Apple is hiding — after all, why else would the card offer better rewards for purchases made through Apple Pay? Nevertheless, those planning to sign up for the Apple card should understand the company’s reasoning for offering it in the first place.
Currently, Apple is fighting something of a losing battle when it comes to dominance in the mobile pay space. Apple Pay has only 32 million users, according to research from Richard Crone, a consultant in the payments industry. That’s only slightly more than the number of people who use Walmart Pay (31 million) WMT, -0.55% and the Starbucks app (25 million) SBUX, +0.88% And it’s far fewer than the number of people who use PayPal and its person-to-person payments subsidiary Venmo (267 million) PYPL, -0.16%
And payments experts have expressed skepticism that Americans will adopt mobile pay with the same fervor as their peers in other countries, especially China. “Mobile payments have grown glacially because in a lot of ways people don’t see a compelling reason to use them instead of just breaking out the old plastic card,” said Matt Schulz, industry analyst with personal-finance website CompareCards.
Others have argued that the Apple card could be a watershed moment, thanks in part to the financial management services Apple is adding to the Wallet app. “It is empowering financial services at the most basic level,” Crone said. “What the iPod was to the music industry, and what the iPhone was for cell phones and mobile carriers, so is the Apple Card to financial services.”
Goldman Sachs isn’t selling your data, but…
Privacy was one of the major selling points in Apple’s presentation Monday. The titanium Apple Card notably won’t include a card number — a choice aimed at curbing would-be criminals looking to steal credit card numbers to make unauthorized purchases. Additionally, Apple said that Goldman Sachs has agreed never to sell cardholders’ data to third parties.
What Apple didn’t say is that Goldman Sachs is keeping that data for its own uses. Ahead of Monday’s announcement, some had predicted that Apple and Goldman Sachs would use the data they collect to make personalized loan offers to card holders.
That prediction, Crone said, has essentially come to fruition, because the financial management features basically allow people to customize their balance repayment terms. Apple and Goldman theoretically may go a step further in the future to offer installment loans to cardholders for big purchases at the point of sale, using the information they’ve collected and analyzed about consumers’ spending habits.
You might experience some kinks with customer service
While this isn’t the first time Apple has offered a co-branded card, it is Goldman Sachs’ first credit card. And as the bank supporting the card, consumers could be in for a bumpy ride when it comes to customer service so long as this is still relatively new ground for Goldman.
“This product has the potential to attract a lot of consumers really fast, but I don’t know that they’ll be capable to deal with the customer-service demand,” said Odysseas Papadimitriou, CEO of personal-finance website WalletHub.
In particular, Goldman and Apple will lack institutional knowledge when it comes to processing claims related to fraudulent charges.
The interest rate may not end up being that low
Apple describes it as “the first credit card that actually encourages you to pay less interest.” And the website says the company’s goal is “to provide interest rates that are among the lowest in the industry.”
But when you read the fine print, it states that the variable annual percentage rates (APR) will range from 13.24% to 24.24% as of March 2019, based on creditworthiness.
The national average APR is currently 17.67%, according to CreditCards.com. In other words, consumers with stellar credit would get below average interest rates. Consumers with poor credit could easily find themselves stuck with a rather high interest rate.
And while the card ostensibly doesn’t charge any fees, including late fees or foreign transaction fees, Apple reserves the right to up the interest rate on the card if consumers aren’t paying off their balances.
Moreover, Apple has not specified whether it will set limits based on creditworthiness for who can even receive a card. “People need to understand what their credit score is,” Schulz said. “The last thing anyone wants is to apply for a card thinking they’ll get a 12% rate and then get a 25% rate.”
The rewards program could cause you to spend more money
Research has shown that mobile pay may cause people to spend more money to begin with. And when you layer rewards on top of that, it could quickly become a budget breaker.
Apple’s promise of rewards accruing daily is somewhat unusual for the credit-card industry. And people hunting for savings might be led astray if they become too obsessed with what they’re getting in cash back.
“It’s important that people don’t get caught up seeing that cash-back come in every day,” Schulz said. “It could be good for people who pay their balance in full, but the last thing anyone should do is overspend to get rewards.”
Speaking of over-spending, while Apple claims it won’t limit rewards, that’s not entirely true. The Apple Cash card will still come with a credit limit — meaning that people won’t be able to spend with abandon in search of cashback without making some credit card payments.
Apple wants to become a card network like Visa or MasterCard
The hype surrounding Apple Card may belie the tech company’s true intentions. As Papadimitriou argues, Apple may not be looking to best its rivals like Google GOOGL, -1.08% and Samsung SSNLF, -3.07% in the smartphone space or PayPal in the mobile pay space.
Instead, it could be looking to replace Visa V, -0.27% and Mastercard. “Why have the middle man?” Papadimitriou said. Through this credit card, Apple could learn what it takes to manage a card network. If its goal of boosting mobile payment comes to fruition, Apple Pay could replace Visa or Mastercard when it comes to managing card transactions.
Naturally, companies like Google, Samsung and Microsoft MSFT, -0.36% would wade into this pool were Apple to follow this path.
However, this could reduce competition: Companies like Visa and Mastercard jockey when it comes to the fees they charge merchants for credit-card transactions. If the number of card networks were to shrink thanks to Apple’s ambitions, the networks would have more leverage to charge higher fees. Those fees could then be passed on to consumers in the form of higher prices.
In the near-term, Apple Card is already poised to work out better for Apple Pay users than most of their other credit cards. As Papadimitriou explains, there’s nothing to stop Apple from stacking the deck in its favor. “Consumers will not benefit from a level playing field anymore,” he said.
Passy, Jacob. (2019, March 28). Here’s everything Apple isn’t telling you about its new credit card. MarketWatch.