What the New Apple Credit Card Offers Consumers

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Apple on Monday unveiled what it called “a new kind of credit card” that is “designed to help customers lead a healthier financial life.”

Slated to debut this summer, it will be available only to iPhone users in conjunction with Apple Pay, the company’s mobile payment and digital wallet service.

The tech giant says the credit card—the first it has offered—combines unique features and low costs. But is it really so different from other credit cards already on the market?

The Apple Card is meant to be used primarily as a virtual credit card. Customers can sign up for it through the Wallet app on their iPhone and can use it within hours through Apple Pay. Users also can get a titanium version to put in their real wallets. To protect privacy, the metal version has no personal information printed or embossed on it beyond the holder’s name.

As with any credit card, the details are in the terms of the complete cardholder agreement, which Apple hasn’t yet released. But based on what we know so far, the card offers a few unique features but doesn’t appear to be revolutionary.

Cash-Back Rewards

Users will get cash-back rewards of 3 percent on any purchases of Apple products made with the card and 2 percent on all other purchases.  

What’s unique: You get the rewards daily, rather than having to wait till you pay your bill to see them posted on your statement. On a small purchase, that might be just a penny or two, but Apple says you can put that “Daily Cash” money toward your Apple Card balance or send it to friends and family in iPhone Messages. 

What’s the catch: Some other cards offer higher cash-back rewards. The Costco Anywhere Visa card, for instance, offers 4 percent back on gas purchases up to $7,000, 3 percent on eligible travel, 2 percent on Costco purchases, and 1 percent on everything else.

If you use the metal version of the Apple Card, rewards are just 1 percent of purchases.

“The simple truth is that this card’s rewards aren’t particularly compelling and aren’t anything that we haven’t seen before,” says Matt Schulz, chief industry analyst at CompareCards, a website that shows comparisons of various types of consumer credit cards.

No Fees, a Promise of Lower Interest

The Apple Card has no annual fees. According to an analysis by WalletHub, the card also charges no fees if you’re late paying or go above your credit limit—another bonus.

What’s unique: Christina Tetreault, a Consumer Reports senior staff attorney who focuses on consumer financial payments, notes that many bank credit cards have no enrollment or annual fees. But unlike the Apple credit card, not all of those cards offer cash-back rewards.

What’s the catch: Without having the card agreement, which lays out the card’s detailed terms, “it remains to be seen exactly what ‘no fees’ really means,” Tetreault says.

What’s unique: If you miss a payment on the Apple credit card, you won’t be charged a penalty interest rate.

What’s the catch: The expected range of the regular interest rate is roughly in line with other cash-back credit cards. The Discover It Cash Back card, for instance, currently offers rates from 14.24 percent to 25.24 percent—after a 14-month, 0 percent promotional rate. The card offers 5 percent cash back at a variety of select retailers and 1 percent cash back at other vendors. It also has no annual fee.

Money-Management Features

The app that supports the Apple Card will offer a number of features to help consumers manage their money and their debt. The card will categorize all purchases, then show users how much they’ve spent on those purchases over time. 

Apple says the card “shows a range of payment options and calculates the interest cost on different payment amounts in real time.” The card will also advise on how to pay a bit more monthly to reduce interest costs and offer the ability to pay more frequently than once a month. The company says the goal is “to help customers make informed choices.”

What’s unique: From Apple’s press materials, the tools look colorful and easy on the eye—and may encourage better financial behavior, says Dave Girouard, CEO of the online personal lender Upstart and former president of enterprise at Google.

“It reminds me of Apple’s Health app,” Girouard says. “You can turn it on and it will tell you how many steps you walked yesterday even if you didn’t have the app open. That can have a significant impact on how you think about your money.”

What’s the catch: These tools aren’t really new. Numerous credit cards, including those from American Express and Chase, will categorize your purchases and visualize your spending patterns in various ways for current cash management and future financial planning. Free money-management apps such as Mint do the same, aggregating your financial data from more than one credit card.

Security and Privacy

Apple says that a unique credit card number is created on your iPhone and stored in a special security chip called Secure Element, which is also used by Apple Pay. “Every purchase is secure because it is authorized with Face ID or Touch ID and a one-time unique dynamic security code,” the company says. “The unique security and privacy architecture created for Apple Card means Apple doesn’t know where a customer shopped, what they bought, or how much they paid.”

What’s unique: Tetreault says that based on the company’s promotional video, privacy and security measures for the Apple credit card appear to be in line with those of Apple Pay, the company’s mobile payment and digital wallet service. Consumer Reports rated Apple Pay tops among mobile P2P services, largely because of its privacy and security measures.

What’s the catch: At this point in time, Consumer Reports hasn’t analyzed the card’s privacy and data security details.

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