Here’s everything Apple doesn’t tell you about its new credit card


Credit card is now available to all iPhone owners in the United States

Users will be able to sign up for the card directly from their iPhone – they’ll need the latest version of iOS software to do so. They will be asked to provide personal information, including age, address and the last four digits of the social security number.

This information will then be sent to Goldman Sachs for approval, which should take less than a minute. If approved, users will be able to start using their card almost immediately with the Wallet app and Apple Pay. A physical card will also be sent to these consumers, which they can then activate with their smartphone.

In a new TV ad campaign for the credit card that worked Sunday in NFL games last Sunday, Apple says the card has no connection with historical and pejorative banking stereotypes. “Apple Card is here. It is a new type of credit card. Created by Apple – not a bank, ”according to the voiceover in the 30-second spot.

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By promoting the new card, dubbed simply Apple Card, the tech giant has played a number of features. Cardholders will earn 3% cash back on any Apple related purchase, 2% cash back on anything purchased with Apple Pay, and 1% cash back on all transactions made with the physical titanium card.

Cash Back Rewards will accumulate in the Apple Cash app daily – this money can be used to make purchases or for person-to-person payments with the app. Apple has also incorporated new features into the Wallet app so that cardholders can better track their spending and adjust card payments based on their financial needs.

These and other characteristics may seem gaudy – but they have already attracted some skeptics. For starters, other credit cards offer better rewards, including US Bank USB,
-1.27%
“Altitude Reserve Visa Infinite” card, which reimburses 3% on all transactions made via mobile pay.

(Apple did not return a request for comment, and Goldman Sachs declined to comment for this story.)

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Still, the card still looks set to grab the attention of Apple enthusiasts – those people who own the latest Macbooks, iPhones, and Apple Watches and are members of the device’s upgrade program.

But once you get past the flashy features, Apple doesn’t tell consumers about its new credit card.

Here’s what you need to watch out for:

Apple wants you to use mobile payments

OK, maybe it’s not really a secret Apple is hiding – after all, why would the card offer better rewards for purchases made through Apple Pay? Still, those who are considering purchasing the Apple Card should understand the company’s rationale for offering it in the first place.

Currently, Apple is in a losing battle over dominance of the mobile payments space. Apple Pay has only 32 million users, according to a study by Richard Crone, a consultant in the payments industry. This is barely more than the number of people who use Walmart Pay (31 million) WMT,
+ 0.41%
and the Starbucks application (25 million) SBUX,
+ 0.10%.
And that’s way less than the number of people who use PayPal PYPL,
+ 0.58%
and its person-to-person payment subsidiary Venmo ($ 267 million).

And payments experts have expressed skepticism about Americans adopting mobile compensation with the same fervor as their peers in other countries, especially China. “Mobile payments have seen frosty growth because, in many ways, people don’t see a compelling reason to use them instead of just pulling out the old plastic card,” said Matt Schulz, industry analyst at the CompareCards personal finance site.

Others have argued that the Apple Card could be a watershed moment, in part thanks to the financial management services Apple is adding to the Wallet app. “It empowers financial services at the most basic level,” Crone said. “What the iPod was for the music industry and what the iPhone was for cell phones and mobile carriers, so is the Apple Card for financial services.”

Goldman Sachs doesn’t sell your data, but …

Privacy was one of the main selling points of Apple’s Monday presentation. Notably, the Titanium Apple Card will not include a card number – a choice to curb potential criminals who seek to steal credit card numbers to make unauthorized purchases. Additionally, Apple said Goldman Sachs has agreed to never sell cardholder data to third parties. or use it for advertising.


Mobile payments have seen frosty growth because, in many ways, people don’t see a compelling reason to use them instead of just pulling out the old plastic card.


– Matt Schulz, industry analyst with personal finance website CompareCards

What Apple hasn’t said is that Goldman Sachs is keeping this data for its own use. Prior to Monday’s announcement, some had predicted that Apple and Goldman Sachs would use the data they collect to make personalized loan offers to cardholders.

That prediction, Crone said, has essentially come to fruition, as the financial management features essentially allow people to customize the terms of repayment of their balance. Apple and Goldman could theoretically go further in the future by offering installment loans to cardholders for large point-of-sale purchases, using the information they’ve collected and analyzed on consumer spending habits.

You might have issues with customer service

While this is not the first time Apple offered a co-branded card, this is Goldman Sachs’ first credit card. And as a bank supporting the card, consumers could be in a rough spot when it comes to customer service, provided that this is still relatively new ground for Goldman.

“This product has the potential to attract a lot of consumers very quickly, but I don’t know if they will be able to meet the demand for customer service,” said Odysseas Papadimitriou, CEO of personal finance website WalletHub.

**** Apple has improved its ability to handle account issues in real time by texting customer service representatives. Nonetheless, Goldman and Apple will lack institutional knowledge when it comes to handling fraudulent charge claims.

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The interest rate may not be that low

Apple describes it as “the first credit card that encourages you to pay less interest”. And the website says the company’s goal is to “provide some of the lowest interest rates in the industry.”

But the fine print says the Variable Annual Percentage Rates (APRs) will range from 12.99% to 23.99% as of March 2019, depending on creditworthiness.

The national average APR is currently 17.80%, according to CreditCards.com. In other words, consumers with exceptional credit would get lower than average interest rates. Consumers with poor credit could easily end up with an above average interest rate.

In addition, Apple did not say whether it will set limits based on creditworthiness for who can even receive a card. “People have to understand what their credit rating is,” Schulz said. “The last thing anyone wants is to apply for a card thinking they’ll get a 12% rate and then a 25% rate.”

The rewards program could cause you to spend more money

Research has shown that mobile payment can cause people to spend more money up front. And when you layer rewards on top of that, it could quickly turn into a budget headache.

Apple’s promise to rack up rewards on a daily basis is somewhat unusual for the credit card industry. And people looking for savings could be misled if they become too fixated on what they receive in cash.


Consumers will no longer benefit from a level playing field.


– Odysseas Papadimitriou, CEO of WalletHub

“It’s important that people don’t be surprised when they see this cash back every day,” said Schulz. “It might be good for people who pay off their balance in full, but the last thing anyone should do is spend too much for rewards.”

Speaking of overspending, while Apple claims it won’t limit rewards, that’s not entirely true. The Apple Cash card will always come with a credit limit, which means people won’t be able to spend with abandon in search of cashback without making certain credit card payments.

Apple wants to become a network of cards like Visa or MasterCard

The hype surrounding Apple Card may belie the true intentions of the tech company. As Papadimitriou argues, Apple may not be looking to beat rivals like Google GOOGL,
+ 0.08%
and Samsung 005930,
-0.13%
in the smartphone or PayPal area in the mobile pay area.

Instead, it could look to replace Visa V,
-0.13%
and Mastercard. “Why the intermediary?” Said Papadimitriou. With this credit card, Apple could learn what it takes to manage a network of cards. If its goal of boosting mobile payment materializes, Apple Pay could replace Visa or Mastercard for managing card transactions.

Naturally, companies like Google, Samsung and Microsoft MSFT,
+ 0.37%
would wade into that pool if Apple followed this path.

However, that could lessen the 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 decrease thanks to Apple’s ambitions, the networks would have more leverage to charge higher fees. These charges could then be passed on to consumers in the form of higher prices.

In the short term, Apple Card is already poised to perform better for Apple Pay users than most of their other credit cards. As Papadimitriou explains, nothing prevents Apple from stacking the game in its favor. “Consumers will no longer benefit from a level playing field,” he said.

This story was updated on August 6, 2019.

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