In a first for both Apple and Goldman Sachs, the two companies joined forces on a new type of credit card that doesn't really require a physical piece. The Apple Card was a long time in the rumor mill as a way for Apple to explore alternative usage for its $250+ billion cash pile better, and materialized when the Apple Pay chief took the stage at what was otherwise a media-centric event.
When it gets released in the summer, the Apple Card will actually be a virtual number in your Wallet app, while the accompanying piece of titanium cutout doesn't have any of the traditional card paraphernalia to worry about if it is lost or stolen, like account numerals, expiration date or CVV digits. Here's how it works:
- From the get-go, the Card is associated with a unique device number stored in the Secure Element enclave on your iPhone;
- Your account number is virtual and stored in your phone's Wallet app, it will be auto-filled in apps and when you do web shopping in Safari;
- Purchases are authorized with Face ID or Touch ID, while a unique code identifier is created for each transaction, or, as MasterCard's boss puts it: the future.
Apple's Card, however, has to live among a sea of reward and benefit credit cards that are vying for attention. It's Goldman Sachs's first foray into the wild seas of consumer financing, too, and perhaps this is why Apple introduced cashback and no-fee incentives together with the Card. How good are those compared to some of the current popular reward cards? Let's stack them up, bearing in mind that the average interest rate for 2018 according to the Federal Reserve has been 13.64%.
Apple Card vs Chase Sapphire vs Capital One Venture vs BofA Cash vs City Premier reward cards
|Apple Card||13.24% - 24.24%||3% Daily Cashback on Apple purchases, 2% on purchases with Apple Pay, 1% on all other purchases, available immediately||- (including no international fees)|
|Chase Sapphire Preferred||18.24% - 25.24%||2X points on travel and dining, one point on all other purchases, 60,000 points ($750 redeemable towards travel) intro bonus if you spend $4000 in the first 3 months||$95 annual|
|Capital One Venture||17.99% - 25.24%||10X miles on hotels, 2X miles on other purchases, 50,000 miles intro bonus if you spend $3,000 in the first 3 months||$0 intro for the first year, $95 after|
|Bank of America Cash Rewards||16.24% - 26.24%||3% cash back in a chosen category each month (up to $2,500 quarterly), 2% at grocery stores and wholesale clubs), 1% on all other purchases, $150 intro bonus||no annual fee, 3% foreign transaction fee|
|City Premier||16.74% - 25.74%||3X points on travel, 2X on restaurants, 1X on all other purchases, 50,000 points intro bonus if you spend $4,000 in the first 3 months||$0 intro for the first year, $95 after|
|Capital One Savor||16.74% - 25.74%||4% cash back on restaurants and entertainment, 2% at grocery stores, 1% on all other purchases, $500 intro bonus||$0 intro for the first year, $95 after|
So, is Apple Card the best rewards card?
Goldman Sachs, the issuer of the Apple Card, estimates it would sign up at least 21 million users with roughly $1,000 a month average spending, for about $882 million in total revenue or 1% of Apple's expected 2020 earnings. Even the Goldman Sachs analysts admit
that Apple's Card is far from offering the most enticing rewards:
We still expect a large percentage of transactions to be done at the 1% return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great.
On the other hand, while not offering the highest cashback percentage, the Apple Card brings other perks with it:
- Immediate registration and real-time Daily Cash rewards accruement
- Accepted everywhere MasterCard is accepted
- Apple doesn't care about targeted advertising, so it doesn't track what and where you purchase
- Goldman Sachs won't comb Card user data for marketing purposes
- The unique iPhone-as-a-credit card arrangement lets you tap on a transaction and see exactly in which coffee shop it's been made on Apple Maps
- The Wallet app lets you track and categorize expenses, or choose tailored installment payments
- Clear end-of-month due date that's not made to be missed
When you add the comparatively decent interest rate range, especially if you have a good credit history, the unique privacy and fraud-prevention advantages that come with dynamic numbers, and the lack of foreign transaction fees when you travel, the Apple Card becomes a good option to have in your payment arsenal. Plus, flexing it in Starbucks.