The Apple Card is great (playing devil’s advocate)

Earlier this week Apple announced their first ever credit card: Apple Card.  They declared Apple Card to be “the most significant change in the credit card experience in 50 years.”

And the world yawned.

3% cash back for Apple purchases, 2% for Apple Pay purchase, and 1% everywhere else.  No annual fee.  Not revolutionary.  Unless you regularly pay Apple a ton of money, you’ll do better with a no annual fee 2% cash back card.  Or better yet, pair that 2% cash back card with the no annual fee Uber card which offers 4% cash back for dining and 3% for travel.

My original plan for this post was to tell people which card (or cards) to get instead of the Apple Card.  But that’s less fun than trying to make a case for the Apple Card.  Still, let’s get that out of the way first:

  • If you want a no-annual fee cash back card, get a no-fee 2% cash back card such as the Citi Double Cash.  Optionally pair it with the no-fee Uber card (4% dining, 3% travel).
  • If you spend a lot via Apple Pay (or Samsung Pay or Google Pay) and you spend at least $325 per year on travel, then get the US Bank Altitude Reserve.  This card offers 3X on travel and 3X on all mobile wallet payments, including Apple Pay.  Points are worth 1.5 cents each towards travel or 1 cent each towards cash back.  If you redeem points only for travel, it’s like getting 4.5% back on all Apple Pay spend.
  • If you want transferable points or other types of rewards, see our post “Best Everywhere Else Rewards Cards” for many examples of cards that earn the equivalent of 2% back or better.

It’s actually pretty cool

Here’s the part where I pretend to love the card and argue why it really is cool and revolutionary.

Instant gratification

Apple promises that if you’re approved for the card you’ll then be able to use the card immediately.  And when you earn cash back rewards, that cash back is also available to you immediately.

A card in the cloud

I’m intrigued by this part.  The card is almost entirely virtual.  The physical credit card is optional.  And it’s numberless.  It can be used to pay for things wherever a physical card is required, but it’s otherwise irrelevant.  The Apple Card is primarily intended to be used with Apple Pay.  If you need a credit card number to make a payment (for online purchases, for example), Apple Card will automatically generate a virtual card number for you.

I’ve always been intrigued by the digitization of our analog world.  Apple Card seems to me to be the first serious push (in the United States anyway) towards eradicating physical credit cards.  And hopefully it will hasten adoption of payment terminals that accept mobile wallet payments.

No fees (almost)

Apple describes the card as having no fees.  That’s different from saying no interest charges.  It does have those.  Still, the lack of fees is truly noteworthy:

  • No annual fee.  There’s nothing special about that.  Many cards offer the same.
  • No international fees.  That’s good, but again many other cards offer the same.
  • No cash-advance feesStop the pressesWhat?  Does this mean that you could go to a bank or ATM and withdraw money without incurring cash advance fees?  That would be amazing even if you didn’t earn rewards on those transactions.  I mean I can’t think of any card that does anything like that.  At the very least it would be a great way for people to get currency when visiting foreign countries if they don’t have a fee-free debit card. My guess is that the answer is no, you won’t be able to use the card for cash withdrawals.  I’m not even sure if they’ll have a PIN available for ATMs or chip and pin transactions.  I guess we’ll find out when the card is released.
  • No late payment fees, No over-the-limit fees, no returned-payment fees: Even those of us who fully intend to pay in full and on time every month mess up every now and then.  Most banks will forgive a first offense if you call and plead your case.  But this is special in that you don’t have to do anything to avoid those fees.  They simply don’t charge them.  Don’t forget, though, that you will have to pay interest when you fail to pay your balance in-full by the end of the month.

Privacy & Protection

Apple claims that they won’t have access to information about your purchases.  Plus, while the card issuer (Goldman Sachs) will have access to that data, they have promised to use that data only to operate the card.  They say they will never share or sell your data to third parties for marketing or advertising.

Even better than the privacy aspect, in my mind, is the things they’ve put in place to stop fraud.  Virtual account numbers for online charges is a great step in itself.  Plus, you get an alert on your phone every time it’s used to make a payment.  It should be really easy to know when someone has stolen your card.  And if they take your phone, the card will be safe unless they also take your finger or face, depending on which type of biometric security your phone uses.  If a thief takes your finger or face you’ll have bigger things to worry about than having to contact Apple to dispute a charge.

My thoughts

As a rewards card, the Apple Card is a snoozer.  There are many, many more rewarding cards.  But hold on.  The ability to earn great rewards is not everyone’s top motivation.  Apple Card might just be a great choice for select Apple fans, especially those who use Apple Pay often.  Consider these scenarios:

  • If you’re geeked out by an almost entirely virtual card, then this might be for you.
  • If you know that you occasionally incur fees despite your best intentions, then this might be for you.
  • If privacy and security are important to you, then this might be for you.

OK, so the card is more evolutionary rather than revolutionary.  And, it’s not great as a rewards card (but not terrible if you use it mostly for Apple Pay).  But it is special in a number of ways.  The card promises to deliver instant gratification; to eliminate fees; to excel at privacy and security; and to push the world further towards digital wallet acceptance.

I’ve almost convinced myself…  but not really.  Rewards are my thing.  Apple, call me again when you unveil the Apple Card XS with 3 times the rewards of the no fee Apple Card…

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

More articles by Greg The Frequent Miler »

Regarding comments: Comments posted at the bottom of Frequent Miler pages and posts are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

25
Leave a Reply

avatar
9 Comment threads
16 Thread replies
14 Followers
 
Most reacted comment
Hottest comment thread
14 Comment authors
Vincent PascualKentAndrew BVX_FlyerMark Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  Subscribe  
Notify of
Jags
Guest
Jags

You may not get charged a CA fee but you’ll still incur interest immediately on money you pull out so it’s still a crap option…just slightly less crappy.

Jags
Guest
Jags

Duplicate

Debit
Guest
Debit

I still get asked to show my card when I make a big purchase even if I use mobile pay.

A lot of Americans are idiots.

Kent
Guest
Kent

I think you’re missing a huge potential benefit of the Apple card, which is that it should force other card issuers (and maybe Google/Samsung Pay) to up their game to compete. iPhone users make up about 45% of US smartphone users, and we can assume that Apple will have a big marketing campaign for this as they do with all their products. The result should be that the general population, including people who don’t care much care about credit card rewards or Apple products, will be impregnated with the idea that 2% cash back and no foreign transaction fees is the new minimum standard in a rewards credit card. All other card issuers will have to offer something equal or better. Cards like the Capital One QuickSilver (which I’ve used in the past for its 1.5% cash back *and* no foreign transaction fee, but was considering closing even before Apple’s announcement) just become obsolete for anyone with an iPhone. Other no annual fee rewards cards from Chase (e.g. Freedom Unlimited), Citi (e.g. DoubleCash) and the like may have to drop their foreign transaction fees and/or increase their rewards above 2%.

In short, every bank issuing credit cards in the US suddenly has a new, big, and powerful competitor which already has their product literally in the hands of a huge percentage of Americans. If they want people to continue using their products, they need to compete.

Usernamechuck
Guest
Usernamechuck

I wonder about the antitrust implications. Will apple use its leverage to take advantage? Pretty tempting for most corporations…

Tyler
Guest
Tyler

Hoping this is just the starter card to be used mainly as in-store financing option to test the waters, and that they follow it up with a premium offering that has benefits attached (maybe AppleCare for devices purchased with card, Apple Music subscription included, discount on upgrade program, bonus % on trade-ins, etc. in trade for an annual fee). They have plenty of options for adding benefits to cards from their existing products/services to compete with offerings from current issuers. Also, while we don’t see value in this card because our wallets are full of better options, younger people may be making their largest yearly purchases from Apple in the form of phones, computers, or devices. For them, this is a no-fee option to finance those purchases at a theoretically attractive rate directly from Apple. There aren’t a whole lot of young people with the ability to pick up Altitude or that are carrying the Plat/Gold/Blue trio and maximizing MR, and I think that’s what Apple is targeting here. For that matter, there aren’t a whole lot of experienced card users that can show an Altitude and the MR trio (or Chase trio if that’s your thing), so the market may be bigger than we think for this card. For a new card user, it is hard to beat 3% cash back on that new laptop without at least some research and planning; Altitude in store and Prime through Amazon are the only two that immediately come to mind without getting into portals and store categories that would be outside the scope of knowledge of a hypothetical Apple Card user. So I do think a valid case can be made for this card, just not to us.

Mark
Guest
Mark

Correct. The market for this card is huge. It’s not best in class for much, but it’s very good in class for a lot.

WannabeHipster
Guest
WannabeHipster

Oh…mah…gawd…y’all!!! Apple just invented “the credit card!”…(wipes away tear)

Pam
Guest
Pam

So the “cool” factor is there in spades, but nothing offered in terms of fees, rewards, or protections you can’t find in another card…just maybe not all in the SAME card.

VX_Flyer
Guest
VX_Flyer

Has there been any word or indication what the estimated credit limits would be on this card (I know, it’s early)? Other than a pretty physical card, I can only see this card of being any use as a no-AF way to add more available credit to boost one’s credit score.

Otherwise, into the sock drawer it goes. It sure is pretty, though. (dammit, CEO Tim Cook! He knew the Apple/Tiffany/blingy effect would work on simple-minded people like myself…)

Andrew B
Guest
Andrew B

Is there any two percent, no annual fee, no foreign transaction fee, physical card available, without having to have a bank account or brokerage account with the issuer. That is what I could use.

Kent
Guest
Kent

The Paypal CashBack Mastercard: 2%, no annual fee, no foreign transaction fee. You do need a Paypal account though. Personally I’d rather not give Paypal any more business than I have to.