Apple Credit Card – Modern Innovation or More of the Same?

Posted by Sam Griffin in Personal Finance on 24 October 2019

Apple’s first foray into consumer credit is finally available - to US iPhone owners at least.

The August 2019 launch has generated wide interest, not just because it’s an Apple product, and that’s what Apple products do, but because the account itself appears fairly unlike other credit cards. That said, how much of the Apple Credit Card’s appeal is down to genuine innovation and how much relies on sleek gimmicks is up for debate.

What is the Apple Credit Card?

The Apple Credit Card is a newly launched cash-back card issued by US multinational bank Goldman Sachs. Exclusive to US iPhone users, the card offers ‘Daily Cash’ on all payments, a feature that deposits money straight into the Apple Pay account after a purchase, with different rates depending on where the spend occurred.

Apple’s marketing hammers home that the card encourages consumers to actually pay less interest and that there are no fees of any kind. No late fees, no annual fees, no purchase fees, or over-the-limit fees.

As it is tied directly with the user’s iPhone, Apple boasts that ‘all the advanced security technologies of Apple Pay — Face ID, Touch ID, unique transaction codes — are built right in’. Any personal information, barring the card holder’s name, is removed from the physical card to cater to the security conscious. Standard 16-digit card numbers, CVC codes, and account numbers that feature on traditional credit cards have been removed from the Apple Card, ultimately leaving a sleek titanium card laser etched with just the user’s name.

How is it Different?

One of the main selling points of the card is that users will never encounter any fees, which are painfully common among competitors’ credit cards.

The only charges you’ll encounter with the Apple Credit Card are the monthly interest rates, which Apple believes are ‘among the lowest in the industry’. It may be too early to say how accurate this is, given that the product has only been available for under two months at time of writing, but the small print confirms that APR will range from 12.99% to 23.99%, depending on the applicant’s credit rating. According to the Federal Reserve, the average APR for US credit cards in first quarter of 2019 was 15.09%. What this essentially means is that individuals with high creditworthiness will enjoy below average interest rates while those with poorer credit ratings will be paying more.

The application process itself also takes just a few minutes and, if you’re approved, you can start spending via contactless payment immediately, without even having received the titanium card. Apple discourages paying with the card itself, as only 1% cash back is earned on transactions made with the card while 2% is earned through the Apple Pay mobile payments.

The (optional) physical Credit Card itself though might not be as robust as the marketing. Taking gentle care of laser etched titanium is a rare responsibility that only comes with the Apple Credit Card. Its weakness? Jeans and leather wallets. The two most common materials that come into contact with credit cards cause the Apple Card to discolour and lose its sleek matte finish. Apple has even published a guide for customers on storing their Apple Credit Card safely. Essentially, the white coating can be scratched and lose its shine, so treat it just as you would a smartphone screen to avoid any problems.

One of the largest differences goes entirely unannounced by Apple and unnoticed by many users. Interestingly, and unlike most other credit cards, your Apple Credit Card won’t feature on consumer Credit Reports – at least not for the time being. At the time of writing, the way you manage your account – whether payments are made on time and what your balance and credit limit are – isn’t being passed to Credit Reference Agencies.

Why aren’t Apple Card accounts showing on Credit Reports?

Reciprocal Data Sharing is similar in the US and UK. Where an organisation like Goldman Sachs accesses a Credit Reference Agency to check its applicant’s Credit Report, it will in turn provide account information about its customers, such as balance and repayment history, to the Credit Reference Agency. What this means is that Goldman Sachs should be reporting details of Apple Credit Card customers to whichever Credit Reference Agency it uses to perform the credit check. Apple’s website confirms that ‘TransUnion and other credit bureaus’ will be checked, so Equifax and Experian may also come to hold data on Apple Credit Card customers.

As to why Goldman Sachs isn’t reporting account information at the moment is not known for certain. Neither Apple nor Goldman Sachs have clarified why their credit card does not yet feature on consumers’ Credit Reports.

This won’t be a conscious decision to reimagine the Consumer Credit Industry, as Apple confirmed that the CRAs will definitely be part of the application process. It’s worth noting that there is no legal requirement to report data to the Credit Reference Agencies, but not sharing the account information is against industry routine. It is highly likely that the absence of Apple Credit Card related data on Credit Reports is due to the recency of its launch and the fact that it is Goldman Sachs’ first foray into credit cards. It will reportedly begin sharing Apple Credit Card information with the CRAs by the end of 2019, backdated to account opening.

While the UK release of the Apple Credit Card doesn’t yet have an official release date, Apple is eager to make it available for the UK market, and is unlikely to be short of consumers wanting one. If you’re looking for one yourself, the application process, while streamlined and lightning quick for most iPhone users, still relies on the industry standard credit check. To ensure that everything being reported about you is correct and to give yourself the best possible chance of being accepted, it’s best to check for yourself what information will be used to assess your application.

If you haven’t already, you can see everything there is to see about your Credit Reports with checkmyfile FREE for 30 days. You can cancel anytime online, or via freephone or email. After the free trial, it costs £14.99 a month until cancelled. If you do find any incorrect information or are just seeking advice about your Credit Reports, our UK based Credit Analysts are always happy to help.

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