10 votes

Apple Card just defined right and wrong in FinTech

21 comments

  1. [2]
    WinterCharm
    Link
    This article makes the point I've been trying to articulate about this card... It isn't the "best" CC based on rewards or anything, but it takes some of those reward benefits and goes for a...

    This article makes the point I've been trying to articulate about this card... It isn't the "best" CC based on rewards or anything, but it takes some of those reward benefits and goes for a near-frictionless experience that puts privacy, security, and ease of use ahead of most other cards.

    We've seen this story play out before -- everyone judged AirPods by the sound quality and declared them a worthless flop, but now they're literally the most popular wireless headphones on the planet, because they put a near-frictionless experience in front of people. That's harder to measure than sound quality, but was ultimately the driving factor behind their wild popularity.

    19 votes
    1. babypuncher
      Link Parent
      This has always been Apple's MO. Why people are consistently surprised that it works, I have no idea. The iPod wasn't the first or most cost-effective MP3 player, but it had a well polished easy...

      This has always been Apple's MO. Why people are consistently surprised that it works, I have no idea.

      The iPod wasn't the first or most cost-effective MP3 player, but it had a well polished easy to learn UI and good integration with iTunes, something I couldn't say for competing products from Olympus and iRiver

      9 votes
  2. [19]
    NaraVara
    Link
    So I agree with most of this, but on a few key bullet points Apple's pitch seems to be kind of BS. Particularly the claims about low fees and cash back rewards. 2% cash back is on the lower end of...

    So I agree with most of this, but on a few key bullet points Apple's pitch seems to be kind of BS. Particularly the claims about low fees and cash back rewards.

    • 2% cash back is on the lower end of most cards. Most other cards give you much more generous rewards, especially if you like spending in restaurants or bars or the mall.

    • And it also ONLY applies to Apple Pay purchases. This is just Apple paying you to expand usage of their product. The way their statement is structured will also, surely, define exactly how much you gained by using Apple Pay instead of your card.

    • They also give you that cash back in the form of Apple Cash. Which is nice and all, but I'd like to be able to cash stuff like that out when necessary. How am I supposed to pay Android users with it? They're still going to insist on VenMo. I can see the gain for Apple though. If the cash stays inside their pile of money they don't have to pay any transaction fees to anyone.

    • They claim low interest rates, but the range of rates is somewhere between 13% and 25% based on credit rating. This is usury. It's in line with most credit card vendors, but they're ALL usurers. So this isn't really taking a stand with "right or wrong in fintech."

    To their credit, they are getting rid of some of the abusive practices they employ at the margins. The granular breakdowns and definitions on spending are great and the up-front nature of how they communicate what things cost, without tacking on fees and other nonsense, are fantastic. Now in a reasonable world, we would have just regulated finance companies out of being able to do that crap in the first place. But I guess until we get Supreme Dictator Elizabeth Warren in charge that ain't happening.

    6 votes
    1. [6]
      cfabbro
      (edited )
      Link Parent
      Isn't it 1% cash back on all physical card purchases, 2% cash back on all Apple Pay purchases (which more physical locations are starting to support), and 3% on Apple product purchases? That's...

      And it also ONLY applies to Apple Pay purchases

      Isn't it 1% cash back on all physical card purchases, 2% cash back on all Apple Pay purchases (which more physical locations are starting to support), and 3% on Apple product purchases? That's still pretty terrible... but it's not just cash back on Apple Pay and Apple products AFAIK.

      https://creditcardgenius.ca/blog/apple-credit-card/

      2 votes
      1. [5]
        NaraVara
        Link Parent
        Yeah. I meant the 2% rate only applies to Apple Pay. Either way it's pretty lame to characterize it as "generous" benefits. FWIW, I think the fancy credit card perks that get paid with interchange...

        Yeah. I meant the 2% rate only applies to Apple Pay. Either way it's pretty lame to characterize it as "generous" benefits.

        FWIW, I think the fancy credit card perks that get paid with interchange fees are basically a low-key tax on the poor (the costs of providing those bonuses get passed on at the point of sale, and the people who can't qualify for fancy credit cards pay it without getting the perks). So good riddance to the end of this stuff. I love my Sapphire card and the free TSA Precheck and concierge services and all, but I think families with poor credit need cheaper groceries more.

        4 votes
        1. [4]
          toly
          Link Parent
          But I'm not sure why you qualify 2% as not generous. I looked up the rewards for Chase's card and it's 1% (60,000 value = $600 rewards) plus an annual fee. Not sure how much the concierge services...

          But I'm not sure why you qualify 2% as not generous. I looked up the rewards for Chase's card and it's 1% (60,000 value = $600 rewards) plus an annual fee. Not sure how much the concierge services end up coming out from a financial standpoint but at least on the surface it seems to be a better deal.

          1 vote
          1. [2]
            Comment deleted by author
            Link Parent
            1. toly
              Link Parent
              Right, definitely depends on what you're spending. I was looking at this card as more of a general spending card to determine whether it is worth it so that's why I ended up with the conclusion I did.

              Right, definitely depends on what you're spending. I was looking at this card as more of a general spending card to determine whether it is worth it so that's why I ended up with the conclusion I did.

              1 vote
          2. [2]
            NaraVara
            Link Parent
            Most other cards offer at least 3% on dining + travel and sometimes on shopping (clothes and basically anything else you'd do at the mall) as well. Apple's card is a flat 2% while only giving you...

            Most other cards offer at least 3% on dining + travel and sometimes on shopping (clothes and basically anything else you'd do at the mall) as well. Apple's card is a flat 2% while only giving you the 3% bonus for Apple products.

            In contrast, the Chase Amazon Card gives you 3% back on Amazon purchases as well as Whole Foods. There are other, more exclusive, cards where you can get up to 5% on specific categories like gas or restaurants. Which cash back benefits are most useful to you really depends on what you like to do and how you spend your money, but I think it is a pretty rare individual to spends more on Apple products in a year than they do on restaurants and bars.

            1 vote
            1. toly
              Link Parent
              Yes special purpose cards definitely have a lot of advantage over this card without a doubt. I was thinking as a general purpose catch-all card this one is not too bad. Paying bills, buying...

              Yes special purpose cards definitely have a lot of advantage over this card without a doubt. I was thinking as a general purpose catch-all card this one is not too bad. Paying bills, buying groceries, etc is where most (in count not necessarily amount) credit card purchases occur and it seemed like this card would be a good one to fit this general use case.

              1 vote
    2. [2]
      JXM
      Link Parent
      This is a problem with laws in the US not protecting consumers from this type of consumer hostile credit card. I think that’s a completely different discussion than the rest of your points. It is...

      They claim low interest rates, but the range of rates is somewhere between 13% and 25% based on credit rating. This is usury. It's in line with most credit card vendors, but they're ALL usurers. So this isn't really taking a stand with "right or wrong in fintech."

      This is a problem with laws in the US not protecting consumers from this type of consumer hostile credit card. I think that’s a completely different discussion than the rest of your points. It is one worth having though. Many countries cap the interest rates that credit cards can charge. As far as I know, the US does not.

      2 votes
      1. NaraVara
        Link Parent
        I agree, it's just disappointing. Apple was willing to really tear into established, consumer hostile practices in the past. They went after the music industry and they really went after some of...

        This is a problem with laws in the US not protecting consumers from this type of consumer hostile credit card.

        I agree, it's just disappointing. Apple was willing to really tear into established, consumer hostile practices in the past. They went after the music industry and they really went after some of the more abusive practices of mobile carriers. If Apple was going into credit cards, I'd have liked to see them bring the same "fuck you and your bullshit" mentality to usurious interest rates as they did to carriers charging absurd SMS fees by releasing iMessage.

        1 vote
    3. [3]
      Akir
      Link Parent
      Ironically my first credit card was an Apple-branded BarclayCard - which had a 47% interest rate. (You can rest assured that I payed that card off before the month was through and never used it...

      Ironically my first credit card was an Apple-branded BarclayCard - which had a 47% interest rate.

      (You can rest assured that I payed that card off before the month was through and never used it again.)

      So I guess that you could say that this is Apple trying to be less crummy. It's still crummy, but it's an improvement nonetheless.

      2 votes
      1. [2]
        cwagner
        Link Parent
        The fuck? Here in Germany, even the crappiest of credit cards don't have more than 16%.

        The fuck? Here in Germany, even the crappiest of credit cards don't have more than 16%.

        1 vote
        1. Akir
          Link Parent
          The entire banking industry is completely insane in the US. Most of it is hidden for the consumer, but behind the scenes are mountains of hidden fees for any type of financial action a business...

          The entire banking industry is completely insane in the US. Most of it is hidden for the consumer, but behind the scenes are mountains of hidden fees for any type of financial action a business might make, which I believe is the major reason why our banking industry is crazy to begin with. It's easy to say that the reason contactless payment hasn't gotten far off the ground in the US is because of consumer mistrust, but the reality is that merchants weren't willing to support it because credit card processors charge extra fees for those types of transactions and usually restrict them to using their overpriced terminals.

          If the credit card companies didn't force the issue, the US still wouldn't have chipped credit/debit cards. Heck, there are still many businesses that don't take chip cards!

          1 vote
    4. [7]
      Comment deleted by author
      Link Parent
      1. jackson
        Link Parent
        If I were to get it (I won't), I'd just drop it onto my CC balance, which is one of the options. Obviously it's going to total less than the balance, so why not lower that faster?

        If I were to get it (I won't), I'd just drop it onto my CC balance, which is one of the options. Obviously it's going to total less than the balance, so why not lower that faster?

      2. [5]
        NaraVara
        Link Parent
        Honestly this is mostly just my personal hangup about "the kids today" using digital payments for big ticket stuff instead of just writing checks like normal people. I subleased my apartment to...

        Honestly this is mostly just my personal hangup about "the kids today" using digital payments for big ticket stuff instead of just writing checks like normal people.

        I subleased my apartment to this college kid doing a summer internship a while back, and she not only didn't have a checking account, but she didn't even really understand how checks worked. Her plan to pay the rent was to make multiple trips to the ATM (because it was capped at $500 in withdrawals per some length of time) and send me all $900 in cash via the post. This was a twenty year old woman!

        I settled for Venmo. But it strikes me as bizarre that the yutes now are comfortable with carrying balances as big as some people's monthly salaries in a proprietary pseudo-bank. Once we get into the hundreds of dollars and above, I don't want anyone handling that stuff unless they're FDIC insured.

        1. [4]
          Micycle_the_Bichael
          Link Parent
          I'm 25 and have had a checking account for about 10 years now. I had never owned a checkbook or written a check until I was 22 and paying rent the first time. The only thing I have ever written a...

          I'm 25 and have had a checking account for about 10 years now. I had never owned a checkbook or written a check until I was 22 and paying rent the first time. The only thing I have ever written a check for is rent. The day I get a landlord that lets me pay in any form other than a check, I will happily never use my checkbook again. There is no reason to use checks anymore. I have to pay someone to give me checks, I have to find the goddamn thing any time I'm going to use it (which is never), to see the change in my bank account I have to just sit around and wait until whomever I write the check to deposit it, when I'm given a check I have to deposit them which is a pain if you have a bank that doesn't do mobile check deposit. Its not like writing checks is all that safe anyway. Convenience + instant feedback + being on par or better security => paypal, venmo, and tech-based banking is better IMO.

          1 vote
          1. [2]
            2c13b71452
            Link Parent
            Is there nothing like Direct Debit in the US for paying things like rent?

            Is there nothing like Direct Debit in the US for paying things like rent?

            1. NaraVara
              Link Parent
              If you're paying with a large corporate property management company there is, but if you're just renting from an individual property owner, most landlords don't bother setting them up.

              If you're paying with a large corporate property management company there is, but if you're just renting from an individual property owner, most landlords don't bother setting them up.

              1 vote
          2. NaraVara
            Link Parent
            Until PayPal decides your money isn't yours and just yanks it out of your account for fun, which they do all the time. Or until they suffer a major data breach and have ALL the money cleared out....

            Convenience + instant feedback + being on par or better security => paypal, venmo, and tech-based banking is better IMO.

            Until PayPal decides your money isn't yours and just yanks it out of your account for fun, which they do all the time. Or until they suffer a major data breach and have ALL the money cleared out. Or until the company goes out of business under your feet and all your deposits are hosed. This is why depositor insurance is important. Banks have it. Tech companies don't (unless they've partnered with a bank). These services also charge transaction fees for conducting commerce outside their little platform monopoly, which is a level of friction that nobody should have to do with when exchanging money.

            As for the rest of it, even the local podunk credit unions do mobile deposit now. The checks cost like $10 for a decade's worth. And the time lag between paying someone the money and them depositing it is time for your account to compound interest. That's a feature rather than a bug I say!

            Speaking of paying interest, there's another thing Venmo won't do. . .

            Its not like writing checks is all that safe anyway.

            The great thing about depositor insurance and financial regulations is that the bank bears the liability for most of this fraud and is generally obligated to refund you if they fall for it. The reason they're lax about some of these things is that it's actually cheaper for them to just get scammed and pay you a refund if you dispute it than it is for them to be aggressively proactive about stopping it. And if you have a decent bank, it's easy enough to stop. I had my backpack stolen with a checkbook in it. One phone call to my bank and the account was closed and transferred.

            Meanwhile, the eCommerce guys are less regulated and more likely to leave you vulnerable to being scammed, with Venmo being one of the least worthy of trust. Paying stuff with these services is fine, but carrying a balance in them is nuts. And people really ought to stop using Venmo. Square Cash at least partners with a bank and acts like a bank and verifies large transactions.

    5. babypuncher
      (edited )
      Link Parent
      I feel like this is only true on cards that have annual fees or other caveats. Also you do still get cash back on purchases with the physical card, just not the full 2%. It seems pretty comparable...

      2% cash back is on the lower end of most cards. Most other cards give you much more generous rewards, especially if you like spending in restaurants or bars or the mall.

      I feel like this is only true on cards that have annual fees or other caveats. Also you do still get cash back on purchases with the physical card, just not the full 2%. It seems pretty comparable to this card that I've been using for years.

      They also give you that cash back in the form of Apple Cash. Which is nice and all, but I'd like to be able to cash stuff like that out when necessary. How am I supposed to pay Android users with it? They're still going to insist on VenMo. I can see the gain for Apple though. If the cash stays inside their pile of money they don't have to pay any transaction fees to anyone.

      Apple Cash can be transferred to a checking account easily, once you've gone through the effort to set it up. Or, you could always just pay down your balance with the cash back rewards. As far as I'm concerned, that is the same as cash in your checking account.