Apple has a new credit card, and while it’s not a ground-breaking product, it’s certainly a contender to dominate the cash-back credit cards space—among iPhone users. The flashy rollout on Apple’s website and at the March 25, 2019 launch event in Cupertino, Calif., framed the card as a weapon against high-interest credit card debt, without offering any debt-shattering tools.
How Competitive Is It?
A 10.99%-21.99% APR is very low for a rewards credit card. Its low end of the range isn’t the lowest out there among all credit cards, but it’s close.
The company’s other co-branded rewards card, Barclaycard Visa with Apple Rewards, carries an APR of 13.99%, 19.99% or 26.99%. And when you look at the Apple Card’s rewards and comparable rewards cards, yes, the APR is lower than its competitors.
But we’re still talking about double-digit, compounding interest here. Whether you’re paying 10.99% or 13.99%, it’s not worth financing your purchases for 2% or 3% cash back. (And that’s if you have excellent credit. Cardholders with lower credit scores will pay higher rates.)
If you’re looking to finance large purchases with a credit card, look for a card with a 0% APR introductory period, and make a plan to pay off your balance within that intro period.
The Apple Card offers 3% Daily Cash on Apple purchases, purchase made with select partners via Apple Pay, and 2% Daily Cash on all other purchases made with Apple Pay. Other purchases made without Apple Pay earn 1% Daily Cash. Those are great rewards if you can use Apple Pay a lot.
What About Apple Card’s Other Features?
Apple also touted the card as “the first credit card that actually encourages you to pay less interest.” Apple claims this because there’s a slider functionality within Apple Wallet that allows you to see how much you can save by paying more toward your card balance.
It’s great to have this interactive feature within what is essentially a credit card statement. It’s not revolutionary, because credit card calculators throughout the internet help you figure out the same thing, but having the tool and your debt information in one place could make it easier to make smarter decisions about your credit card payment. It also has a beautiful design, which most credit card calculators lack.
But as far as being a pioneer in encouraging people to pay less interest? That argument doesn’t hold up. Again, look at the Citi Double Cash: It encourages you to pay your statement quickly, because you don’t get your second 1% cash back until you pay your credit card bill. There are also credit cards available with lower ongoing interest rates than Apple Card’s low-end rate, and there’s a slew of cards offering 0% APR introductory periods on new purchases. Apple Card has no introductory rates. And in place of late fees—the Apple Card boasts its no-fee policy—people who miss Apple Card payments could see additional interest added to their balances.
The Bottom Line
Apple Card has some attractive benefits for Apple Pay users (read: iPhone users), and the most qualified applicants will get a great interest rate. But the company’s claim that the card is leading the industry in encouraging people to pay less credit card interest isn’t as impressive as it sounds.