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Apple card —revolutionary or just another credit card?
By MyBudget Editor

Apple’s new credit card claims to be “the most significant change to the credit card in 50 years.” Or is it just another credit card?

What’s different?

As with all things Apple, the launch of their new credit card in the United States (US) was executed with pomp and ceremony. Apple CEO Tim Cook described it at the launch as “the most significant change to the credit card in 50 years.”

The new card (available in the US from July—no current date for release in Australia) certainly looks different at first sight. The card itself is the embodiment of minimalism—paper thin, made out of titanium and pretty much naked except for its owner’s laser-engraved name and the embossed Apple symbol. The usual 16 digits, expiration date and CVV code are missing.

Apple’s design philosophy of elegance + simplicity is also found in the card’s terms with the promise of no late charges or international transaction fees. Plus, being Apple, cardholders have access to an app that claims to organise their expenses into categories to help manage spending.

To apply for the card, applicants will need to own an iPhone or other Apple device and apply via the Wallet app. Once approved, card holders will immediately receive a digital version of the card. The physical card will later turn up in the post.

Despite being chip-enabled and supported by Mastercard, the new Apple card is not enabled for swipe or tap-and-go payments. To make a payment at a checkout terminal, the cardholder will need to use contactless Apple Pay on their iPhone or other Apple device. To make a purchase with a retailer who doesn’t accept Apple Pay, the cardholder will need to generate a card number via the Wallet app.

There are no frequent flyer points to be earned. Instead, the card provides two-percent cash back on purchases using Apple Pay and three-percent on Apple products, including Apple Music and iCloud storage.

What’s the same?

The offer of no late fees is not unique in the US market, but would be in Australia if or when Apple launches the card here. An interest rate of 13.24 percent has been announced for US customers with a good credit rating, scaling up to 24.24 percent for those with lower credit scores. These rates are in line with the rates of other US-based credit cards, as is Apple’s cash-back offer and zero fees on overseas purchases.

Let’s also be clear that Apple is not the first credit card to have a fancy name or special livery or a card without numbers. Silver, gold, platinum, black and “elite” cards have been around for decades and none have managed to maintain their allure. The adage proves true that everything new eventually becomes old.

Apple’s credit card joins a slew of others that now come with sleek numberless fronts. Rather than representing a leap in Apple technology, it’s the final step away from the old days when raised numbers on the card were needed to create a carbon paper impression of it. Credit card imprinters are now long gone, replaced first by a magnetic strip and now by microchips that encrypt the card’s information.

It’s too early to tell if the expense tracking app that Apple is offering with the card is a genuine attempt to help people control their spending or a marketing tool designed to drive buying behaviours. Categorising your credit card spending is a good start, but it means little if you’re only looking at your statement from a historical, reactive perspective at the end of each month.

If you want to get serious about controlling spending, a comprehensive budget will create a proactive plan for all of your expenses and income, show what you can achieve with your money over the next 12-months and beyond, and drive positive daily money habits. Our Complete Guide to Budgeting will help you get started.

The psychology behind the card

Whereas other credit cards aim to be accepted as widely as possible, it’s clear that Apple’s intention is to keep users inside the Apple Pay environment. When a user adopts an Apple credit card, they become largely beholden to using the card on Apple devices. Switch away from the Apple environment and most of the card’s functionality becomes defunct.

Marketed as a convenience to customers, the entwinement of paying and technology is actually part of a strategic undertaking to reduce the “friction” of spending. There’s an entire field of applied science that studies the psychology of paying and seeks to understand why some payment methods make us spend more.

Numerous experiments have demonstrated that people are willing to spend more when they pay with a credit card instead of cash. In fact, the more abstract the notion of money is, such as paying by tapping a phone, the less likely spenders are to appreciate money’s proper value. As a result, they spend more often and in higher amounts. Read more about the psychology behind frictionless payments and how to use it to your advantage.

The verdict

Revolutionary payment method or just another credit card? Just another credit card.

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