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Apple Card Anyone?

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At their March event, Apple made the surprising announcement that they were jumping into the credit card business. Partnering with first time card issuer, Goldman Sachs, the company is proclaiming that their card will be different than others. Let’s take a look, shall we?

No Fees

Perhaps the boldest of their statements is that the Apple Card will have no fees. Do a Google search for “No Fee Credit Cards”, you’ll get long list of cards with “No Annual Fee” but none with No Fees at all. Now, this does not include interest charges for the card. And an argument could be made for that being a fee. But let’s not get bogged down in technicalities.

What it does include are annual fees, cash-advance fees, over-the-limit fees, late fees. All have been expunged from the Apple Card.

Interest Rates

Like everything they do, Apple wants to cast as wide a net with their new card as possible. So, they’ve got a wide range on their interest rates as well. Their website proclaims “Variable APRs range from 13.24% to 24.24% based on creditworthiness. Rates as of March 2019.” So those could change between now and the time they launch the card.

At this point, there is no way to tell what criteria they will use to decide on your interest rate. If you have a FICO score of 750+, you’re probably getting the lower rate. Anything under 700 is probably looking at the higher end of the spectrum. It is also not known which credit reporting agency or agencies they will use to check credit scores.

So, how are Apple and Goldman Sachs making money here? Interchange fees, or swipe fees, are what a vendor pays in order to take payment from a card issuer. This is one more reason they want to get these cards out there. The more Apple Cards, the more interchange fees they get to collect.

Cash Back

With every use of the Apple Card you will get “a percentage of your purchase back in Daily Cash.”

Apple Card holders will earn the following rewards:

  • 3% cash back on Apple purchases and services (including the app store, Apple Music payments, etc.)
  • 2% cash back on all Apple Pay purchases
  • 1% cash back when using the physical card

There’s no limit to the total rewards you can earn.

The daily payout is something new though. Most card issuers will wait as much as 2 to 3 months before making cash back earnings available. Others will wait until you’ve amassed $25 or more before allowing you to use them. Apple will apply your cash back daily. The catch being that you have to have your Apple Cash card set up in your Apple Wallet on your Apple iPhone in order to get it. How do you like them Apples? That Cash card is already in your wallet, by the way.

The trick here is that you’ll have to use Apple Pay in order to spend that cash back bonus. Which means Apple and Goldman Sachs get to collect the interchange fee all over again.

Minimum Payment?

You get your monthly statement and there is the “minimum payment due”. While Apple Card will also have a minimum amount, the card app will show exactly how much interest you’ll pay based on the amount of your payment. While they claim this will encourage you to pay less interest, the fact of that remains to be seen.

The Actual Card

Make no mistake, Apple wants you to use Apple Pay whenever you make a purchase. But there are many vendors that aren’t yet set up for this. Or, in the case of JCPenney, have opted out of accepting Apple Pay. So, Apple will also send you an etched titanium MasterCard branded credit card for use anywhere else.

The card is fairly spartan in design. An etched Apple logo, the EMV chip, and the cardholders name grace the front. The back has a silver magnetic strip, the Goldman Sachs logo, and the MasterCard logo. That’s it! No card number. No expiration date. All of that info is stored in your Apple Wallet. You can access it utilizing your iPhone FaceID security feature.

When?

All Apple will say is that the card is “coming this summer”. But, Apple employees have already started receiving their cards. This could just be a wider beta test, or it could signal that Apple will start taking applications any day now. We’ll just have to wait and see.

Summary

If you’re already ingrained in the Apple product-sphere, the Apple Card may hold some interest for you as well. If not, then you may be able to find a credit card that is more to your liking.


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