Apple Credit Card: Interest Rate, Perks, and When It Will Be Available

The Apple Card is no longer unofficial news. The new companion credit card for Apple Pay officially made its debut on Monday during a much-watched media showcase for the company’s new service products.

As expected, the new credit card will offer two percent cash back on some purchases, plus a slew of personal finance and spending tools designed to help one pay off their balance faster. But because the cash back offered isn’t particularly generous, some experts seem skeptical that the credit card would be able to lure in anyone besides Apple fans.

“The rewards offer wasn’t anything we haven’t seen before, and they didn’t get terribly specific with the rates,” Matt Schulz, chief industry analyst at CompareCards, tells Inverse. “No other specific subset of folks jumps out at me as somebody who this seems particularly targeted to [besides Apple fans.]”

Other analysts echoed the impression that Apple Card is unlikely to win over new credit card consumers on its own merits: “People will sign up for it,” Ted Rossman, an industry analyst at creditcards.com, comments in an email to Inverse. “But that will be mostly because they love Apple, not because this card is better than anything that already exists.”

Jennifer Bailey, VP of Apple Pay, presented the credit card as a game-changer for financial services, claiming in her introduction of the product that “it can do things that no other credit card can do.” And to be sure, it is rare to find pure, no fee credit cards that also offer at least some perks, Brian Karimzad, founder of MagnifyMoney, told Inverse. But without offering luxe perks or concrete details about how easy the new credit card will be to get, it’s unclear who the credit card is really for, at least based on the details announced today. Here’s what we know for now:

Apple Card: Interest Rates, Credit Score, Fees

Apple made a big to-do of not charging any fees, saying it will not charge international transaction fees or late fees, and won’t have an annual fee. No fee cards are hardly uncommon, but as Karimzad noted, these are typically found on balance transfer cards — cards designed to help you get out of debt — or basic credit cards with few perks.

As with most credit cards, Apple will charge an interest rate that’s dependent on your credit. They didn’t give a lot of details about what the APR on its new credit cards would be, saying only that they would be “among the lowest in the industry.” CompareCards’ Schulz says that the likely interest rates and accepted credit scores will fall on a wide range so that Apple can offer the credit card to as many people as possible without assuming too much risk.

“I doubt they’ll make it hard to get,” Schulz said. “It would stand to reason that they would want to make the Apple Card available to anybody with an iPhone, at least most people. What that will probably mean, from a rates perspective, is you may end up having a pretty wide range of APRs when you sign up for this.”

The average credit card APR was about 16.46 percent last year, according to NerdWallet. To qualify for a lower APR, you’d likely need a credit score of around 700 or more. It will be available starting this summer.

Apple Credit Card: Perks and Features

Most of the Apple Card’s most compelling perks are tied up in Apple Pay and the iPhone. For example, there’s a new feature that Bailey says will let you begin using your Apple Card right away, not unlike the instant approval that’s often offered with retail credit cards: “Just sign up on your iPhone and in just minutes, you get your Apple Card, and you can start using it right away,” she said.

Apple’s other personal finance features, “designed for a healthier financial life,” are nothing to snuff at. Apple Pay’s UI will de-emphasize the minimum payment you can make (tiny “minimum payments,” consumer protection advocates have long argued, are a tool for luring people into debt traps), and Apple Card will also make statements much easier to read. Its most powerful and unique feature in this regard is a new machine learning algorithm that will decode the billing addresses for any merchants you use so that all charges show up as easily decipherable.

There will also be a number of budgeting features that are exactly like what you’d see in Mint, like color-coded categories to help you track your spending and tools that let you see how your spending is changing day-to-day or week-to-week.

Apple Credit Card: Rewards and Cash Back

Unlike many of the most coveted credit cards, like the Chase Sapphire Reserve, which use lounge access and free hotel stays to lure in moneyed consumers, Apple’s credit card will use a strictly cash back setup for rewards.

“With points, you’re never sure how much they’re worth,” Bailey said. “We want you to get the most for your money … So every day you spend, cash is added to your Apple Cash card, which is also in the Wallet app, and it’s cash, like real cash, so you can do anything with it.”

It’s true that cash back tends to pay off more quickly at moderate levels of spending, but it’s also important to note that Apple’s cash back payout is just OK. Every time you pay with the iPhone or iWatch, you’ll get two percent, while paying for Apple services will get you three percent daily cash. Other transactions will pay just one percent cash back. As Rossman of creditcards.com notes, even using Apple Pay can net you more generous benefits from other issuers. The US Bank Altitude Reserve Visa, he notes, should work out to about three percent cash back when you use smartphone-based payment systems.

In other words, Apple’s credit card is not a credit card for points hackers.

Apple Credit Card: Privacy, Security

Beyond modest cash back and what will likely be one of the better budgeting UIs in fintech, Apple also hopes that it can make privacy a selling point. It notes that its issuer, Goldman Sachs, will never sell or work with marketers to monetize your data (of course, that doesn’t mean you shouldn’t expect loan offers and the like from Goldman’s own consumer banking operation).

Additionally, each payment will also generate a “one time dynamic security code,” and be authenticated using either Touch ID or Face ID, which Apple says will cut down on identity theft.

Privacy in particular is a big differentiator from other popular personal finance applications like Mint, which usually make money by referring users to different financial products. Apple also notes that its spending tools will run on hardware housed within the iPhone itself, so that the company will never know “what you bought, where you bought it, or how much you paid for it.” It’s important to note the omission here: Apple not knowing what you bought is not the same as no one knowing what you bought.

Apple Credit Card: The Verdict?

Apple’s credit card isn’t bad, but it’s not great, either. Without points, there’s unlikely to be much opportunity to game the system or book yourself a $20 vacation, for example. Its cash back terms are relatively generous, but not as generous as the Citi Double Cash, which offers two percent on all transactions. Karimzad said the card’s biggest allure will likely be its luxurious look, not its features or its terms.

“The most exciting thing for a lot of people will be the actual feel of the card,” Karimzad said. “If you look at the online forums like Reddit and myFICO, there are folks that get excited about the feel of a card in their hand and the prestige it confers.”

There’s no question that Apple Card will offer some new and best-in-class financial tracking and budgeting features, though, and unlike many of the other products in this area, it will pair this financial tracking with privacy. But few credit card consumers choose their card based on its metallic feel, the card’s budgeting features, or discounts on Apple products. By trying to appeal to everyone, Apple may have given short shrift to the credit card features that matter most.