Does Costco offer a cashback option

Apple Card in comparison: as good as it seems?

Alaina Yee

Credit cards are far more popular in the US than in Germany. Macworld has examined more closely how the Apple Card compares to other cashback cards.

EnlargeApple and the credit cards

Apple may not be turning into a bank anytime soon, but it wants to offer services for your money. However, while we heard a lot about financial health, interest and fees on stage during the Apple Card announcement on Monday, the hard numbers behind Apple's new cashback credit card built on top of Apple Pay were missing. Apple emphasized zero fees and payback percentages that are better than other cards, but much of the presentation focused on simplicity, security, and usability.

Apple is positioning the Apple Card as the counterpart to competing credit cards that offer rewards based on collecting points and converting those into airline miles or gift cards, but it's not that the Apple Card is completely unique when it comes to getting cash back numbers. Several competing credit cards offer similar repayment benefits. So how does the Apple Card differ? We delved into the details of the payback percentages, interest rates, and fees, and did the math to see how the Apple Card compares to the most popular cashback cards in the United States.

The most popular cashback credit cards include the Citi Double Cash, Chase Freedom Unlimited and Capital One QuickSilver with the same payouts as the Apple Card. The Double Cash makes up a total of 2 percent cashback on purchases, while Freedom Unlimited and QuickSilver give 1.5 percent back. (Discover also offers cashback instead of points, but only 1 percent on most purchases and 5 percent on a number of changing categories.) All of the cards here don't charge an annual fee either, just like the Apple Card.

As the graphic (© Macworld) above shows, none of the competitors are completely free of charge, nor are they all as straightforward as the Apple Card. So Apple is definitely gaining ground in this regard, with clear terms and conditions and only minimal mark-ups. At least until now. There's a lot we don't know about the Apple Card. Until we see full agreement with a breakdown of the interest rates and fees, we won't know exactly how Apple handles things like cash advances and bank transfers, but the facts we know today are unlikely to change until summer.

If you take a closer look at the numbers to see how useful the Apple Card is to you, you will find that the gap between it and the competition is not as great as you might think. Since the Apple Card is a rewards-based credit card, there are several important considerations to make that put the promise of zero fees and lower interest rates into perspective.

EnlargePurchases made with the physical Apple Card result in a 1 percent refund.

First of all: An iPhone is required for the Apple Card. Since the card is based on Apple Pay, it is registered and saved in the Wallet app, which is not available on any other device, including the iPad. There are no annual fees, but you can include a monthly surcharge in the form of telephone payments.

And then there are the contract terms that are industry standard. As a cashback card, the Apple Card's variable interest rate is higher than when using a standard credit card. Unless you can fully settle your balance every month, there will be little profit on the rewards - the money you put on interest will destroy the benefit of the repayments. We found several credit unions selling cards with interest rates below 10 percent, so if you're trying to get your bills paid on time, be sure to check out the competition before you sign up for an Apple card.

If you tend to leave residual debt on the card, the Apple Card's lowest interest rate may not matter much anyway. Like all cards, the best tariffs are reserved for people with good credit who balance their balance every month. And while Apple rates can start at lower rates than competing cards, at about 25 percent they are on a similar level to the competition on the high end.

Plus, many other cards offer sign-up bonuses and additional perks that Apple didn't say anything about on Monday. The Chase Freedom Unlimited and Capital One QuickSilver both have a $ 150 sign-up bonus, and the Visa Signature versions of these cards come with features like extended warranty protection, purchase protection, and travel cancellation insurance. These benefits can have financial value if you take advantage of them, and Apple didn't reveal anything other than basic terms and functionality of its card in the showcase.

EnlargeIf more details about interest rates (e.g. on cash advances) are released, we will have a better picture of how good the Apple Card is compared to its competitors.

Good deal or even better one

Based on the facts we know, the Apple Card is tempting. The simple budgeting tools make a good case in a crowded market, and in difficult financial situations, it's nice to know that we won't be burdened with fees on top of the basic fees. The Apple Card's transparent interest and fee structure is one of the least painful options: not paying an additional fee for a cash advance or exceeding the credit limit could make a noticeable difference in a person's financial situation.

But while the Apple Card is very good business, we wouldn't say it's the best. You can get more money back with other cards, especially if you spend a lot on certain categories like restaurants or travel. And if you do your homework, you can find other refund cards that offer even better prizes and rewards than any of the cards mentioned here.

EnlargeThe Citi Costco Anywhere card offers higher cashback than the Apple Card in selected categories.

For example, if you're a member of the Costco cooperative (which costs $ 60 or $ 120 per year), the Citi Costco Anywhere card offers 4 percent reimbursement on gasoline, 3 percent on food and travel, 2 percent on Costco purchases, and 1 percent on everything else without an annual fee. And there's also the Uber Visa card, which also offers a high payback rate in select categories and a $ 100 sign-up bonus: 4 percent in restaurants, 3 percent in hotels and airline tickets, 2 percent online purchases, and 1 percent everything else. Apple's own customer card also offers special interest-free financing for up to 18 months, depending on what you spend (although we don't know how long that will be available).

Of course, with these cards you need to be very careful about what you are buying and where you are buying it. The Apple Card is about simplicity, and in that respect it clearly beats the competition. Other apps and websites offer similar functionality, but none centralizes and packages them as neatly as Apple promises. Alerts, expense trackers, transaction history, and pay-down help are much clearer, and the chat-based support could be a boon for those too busy to make phone calls.

Conclusion: You can find a better card than the AppleCard purely based on the numbers. But for many iPhone users, an extra point or percentage point discount here and there probably doesn't matter. The experience and convenience will be more attractive, and the titanium card will be seen as the ultimate status symbol, even if savvy buyers get bigger rewards. That's probably what Apple is betting on.