Announced by Apple back in March, the card was created in partnership with banking and investment giant Goldman Sachs. It’s set for a full US release later this month, but there is still no word on if or when it will hit Australian shores.
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What does the Apple Credit Card offer?
The Apple Credit Card is available exclusively to iPhone customers. Primarily a digital card, it is accessible through the Wallet app. However, Apple also offers a physical titanium card (with no numbers) that customers can request and use at places that don’t accept Apple Pay.
Apple promises a quick sign-up process, no annual, cash-advance, over-the-limit, or late fees, tools to monitor and categorise your spending and the security technology available through Apple Pay, such as Face ID, Touch ID and unique transaction codes.
One of the most talked-about features of the Apple Card is its ‘Daily Cash’ feature. This allows customers to get a small percentage of every purchase they make back as cash, or as extra credit on their Apple Credit Card account. Apple offers three percentage tiers: 3% back on all Apple purchases, 2% back when you buy something using Apple Pay on your phone, and 1% back if you pay using your physical Apple card. This cash can then be used to pay your Apple Card bill or make further purchases, or you can transfer the cash to your bank account.
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Another feature is the card’s interest estimator tool. When you’re ready to pay your credit card bill, Apple says it will estimate how much interest you’ll pay based on the payment amount you choose to make. This is done in real time, Apple says, so you can decide how much you want to pay down and potentially keep interest payments to a minimum.
But with Apple advertising an interest rate ranging between 12.99% and 23.99% (as at 2 August 2019) depending on the applicant’s creditworthiness, even if you manage to pay less interest, the card might not come at the most competitive rate. According to American website CreditCards.com, the average interest rate in the US is currently 17.74%. This means Americans with lower credit scores could be paying a higher than average interest rate. Of course, Aussie consumers will have to wait and see how Apple’s interest rates could stack up here.
Is it worth the hype?
Despite only rolling out to a limited number of US-based users, the card is reportedly already poised to be a hit. According to a US survey by J.D. Power, 52% of people currently using Apple Pay said they were likely to apply for the Apple Card in the next 12 months. While American consumers appear to be buying into the hype, some of the experts here aren’t sold.
“There is little that would set the Apple Credit Card apart from other options available in the Australian market, with a number of credit cards offering benefits such as no fees or cashback reward options,” Canstar’s Rating Manager and Senior Research Analyst for Banking, Joshua Sale, said.
“One of the main drawbacks of the Apple Credit Card, when compared to other options, is how reliant it is on the consumer to be fully integrated within the Apple ecosystem – as without an iPhone, you will be unable to view statements, make repayments or even apply for the card in the first place,” he said.
While the cashback feature may be attractive for US customers who already have an iPhone, Apple may find it difficult to offer the same cashback percentages to Aussie consumers.
“Providing this level of reward return could prove challenging in Australia’s highly competitive credit card market. The Australian market is dominated by bank issuers who are regulated in a way that effectively puts a ceiling on Australian card issuers’ ability to provide attractive reward returns,” Mr Sale said.
Mobile payments and potential legal concerns
The use of mobile phone payments has also been brought into focus as a result of a surprising potential legal concern for users. In a recent Facebook post, Victoria Police posed the question: “When using a fast-food outlet’s drive-thru service, can I use my phone to pay?” While the majority of voters said ‘yes’, Victoria Police clarified that this is actually illegal.
According to Victoria Police, motorists can be slapped with a $484 fine and incur four demerit points if they use a mobile phone while driving. Victoria Police said motorists would need to pull the hand brake and switch the engine off before they could legally pay using their mobile phone.
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