Promising mitigating payment terms, low interest rates and no fees, the new Apple card is trying to be a revolutionary credit card for the rest of us. But many of its functions are not really new, but a development of rewards and fee structures that other cards already offer.
One of the most compelling existing cash not included in the annual fee is Citi Double Cash, which earns 1 percent cash back at each purchase, and then another 1 percent when you pay your bill. This is basically a 2 percent bonus on every dollar you spend, provided you pay your bill in full and on a monthly basis.
] Citi Double Cash's archive is the Fidelity Rewards card, another annual debit card that offers 2 percent cash back on everything. You do not have to pay your balance in full to get 2 percent, but you must deposit or invest your rewards on a Fidelity broker or cash handling account.
With the Apple card, you get 2 percent cash back, but only on transactions that you make through Apple Pay, whose acceptance is spread but far from everywhere. Essentially, how much money you earn depends on how fast Apple overcomes the mobile payment market, and how often will you remember to whip your phone instead of your credit card at the cashier.
But many Americans do not pay their credit card bills in full and on time, as evidenced by the billions of dollars the banks make on fees and interest expenses. This means that many people do not get the full benefit of Citi Double Cash's 2 percent cash back, at least in the short term. However, because the entire cash you received on your Apple card is deposited every day, no matter when your last payment was, many could move forward by switching to it.
And there are almost certainly more Americans who own or dream to own an Apple iPhone than a Fidelity broker account, so the Apple card could be more convincing than Fidelity's card as well. Don't add any late payment fees, which Fidelity and Citi both charge, and the Apple card is really forming the credit card. The Americans never knew they needed.
But the giant catch with the Apple card is that it is still issued by a bank Goldman Sachs, in this case. Banks need to make money, which means the Apple card, like any other credit card, picks up interest as high as 24 percent depending on your credit. The interest rates here are just as punishable as other credit cards, but you are even more likely to pay them, as there are no late fees to stimulate pay in time. A tracker shows how much interest you are charged based on how much of the balance you pay down, but it is very boring than Citi's way of awarding an extra 1 percent reward on every dollar you pay.
Clearly the Apple card is really a card for the rest of us; those who do not always use credit in a responsible manner but still want rewards. In that respect, it is worse than Citi Double Cash and Fidelity Rewards, which still gives huge profits from consumer irresponsibility, but at least encourages us to pay bills on time.