This week tech giant Apple announced they are getting into the business of credit cards. Powered by MasterCard and Goldman Sachs, ‘Apple Card,’ is touted as “the most significant change in the credit card experience in 50 years” by Apple CEO Tim Cook. The tag line in the media release is “Built on Simplicity, Transparency and Privacy, and Designed to Help Customers Lead a Healthier Financial Life.” Here is what we know about the card so far.
The card will be available to residents of the United States starting this summer. There is no date for a Canadians launch of the card, but if we do get it the card will be available through our Apple wallet. Customers can opt for a virtual card or a physical laser-etched titanium card. Anyone already using Apple pay will be familiar with how the new ‘Apple Card,’ will work.
Easy sign up
As is with most Apple products ease of use is paramount. Apple says in minutes customers can sign up for Apple Card in the Wallet app, and start using it right away. For trouble shooting they will have support 24/7 that customers can cases through text message. Apple card will keep a real-time view of their latest transactions and balance right in the Apple Wallet. To help customers better understand their spending, Apple Card says it will provide weekly and monthly spending summaries.
It’s all about the money
To differentiate themselves in what is already a very crowded space, Apple Card says it will have no fee and a lower interest rate. They are throwing in sweetener by also offering daily cash back on purchases. “Every time customers use Apple Card with Apple Pay, they will receive two percent Daily Cash. Customers will also get three percent Daily Cash on all purchases made directly with Apple, including at Apple Stores, on the App Store and for Apple services.” The card will also have not transaction fees.
Unlike traditional credit cards customer who miss a payment will not be charged a penalty rate. But, they explicitly state, that late or missed payments will result in additional interest accumulating toward the customer’s balance. So missing a credit card payment is still very expensive. Customers will also have access to map out different scenarios. The card will show a range of payment options and calculates the interest cost on different payment amounts in real time. They will also suggest where customer can pay more or offers to schedule more frequent payments.
For each ‘Apple Card’ user, a unique card number is created and stored safely in the device’s Secure Element. Apple says every purchase is secure because it is authorized with Face ID or Touch ID and a one-time unique dynamic security code. They add they will now have access to data like what you paid for and where you bought it.
Many new features
This announcement by Apple was made as a part of series of many new feature and tools available soon from the company. The tech giant also introduced several fee-based services such as Apple News, a new subscription service of magazines and newspapers. The feeling is this is to offset declining iPhone sales.
From a personal finance perspective using your phone to purchase items in nothing new. But with ease of use increased, customers could be that much more susceptible of getting themselves in to debt they cannot afford.
We all know how easy it is to tap and swipe your card. Apple Card makes it even easier and faster to spend your money. Cashless is great for tracking purchases, looking back at your past bad spending habits, but it could be terrible for the free spender.
Whether you use Apple Card, or a traditional credit card the rule is make sure you have money in your bank account before you swipe the card or tap your phone to pay for something.