Why Apple Is Entering The Crowded Credit Card Field
MARY LOUISE KELLY, HOST:
The new titanium Apple credit card launched last month. It certainly looks different from the cards you've already got in your wallet - sleek, all white, no number on it and so delicate that the company warns you have to be careful how you store it so it doesn't get stained. But there's more to distinguish this card than just looks. And that's what we're going to consider on this week's All Tech Considered.
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KELLY: We're joined now by Ted Rossman. He's an industry analyst at creditcards.com and he is on the record as being officially underwhelmed by this card.
Ted Rossman, welcome.
TED ROSSMAN: Thanks for having me.
KELLY: So how is the Apple Card different from any other credit card?
ROSSMAN: When it comes to the key aspects, like rewards, interest rates, fees, we've seen it all before. When I said I was underwhelmed, I was specifically referring to the rewards. That's a huge thing for the 40% of cardholders who can pay their bills in full. We all love cash back, airline miles. This card lags most rewards cards. For the most part, this is something that's appealing to Apple fanatics. It's not a groundbreaking card.
KELLY: So you think people who may be attracted to this card are going to be people who liked Apple anyway and want to have an Apple Card in their wallet.
ROSSMAN: Yes. I think for the Apple fanatic, there is a definite desired market there. My thinking on this card has also evolved a little bit in that they're approving a lot more people with subprime credit scores than I expected. And I think when you look at this card through that lens, the rewards start to look more attractive because, generally, you can't get a good rewards credit card if you're FICO score is below, let's say, 670. But Apple is really dipping into the low 600s, even the 500s in some cases. So if you have spotty credit because of a blemish in the past or if you're a young adult or an immigrant who's new to credit, then this card starts to look more attractive.
KELLY: I'll also put on the table what Apple says should be a selling point for this card. They say that it's got way better privacy and security features than some other credit cards. Fact-check that for me. Does it?
ROSSMAN: That's true. This card is more secure for a few reasons. One is that the card number and the expiration date and the card verification value, they're not even printed on the physical card.
ROSSMAN: That's really unique. To get this card online, you need to also have the phone. That's how you're going to buy something from a website. You're going to have to look in the Wallet app on your iPhone and find the number and the expiration date there. That's secure. They're also pushing privacy in another way, which is Apple and Goldman are not going to share or sell your purchase information, which is pretty unique in the credit card world.
KELLY: You mentioned Goldman. What's their stake in this?
ROSSMAN: Goldman Sachs is the card issuer. They're the bank, you know, behind the card. It's their first consumer credit card, which is notable. I actually think it's going to be even harder for them to make money with this because the card's advertising no fees. They're advertising lower interest rates. And they're really encouraging you to pay as much as possible through these budgeting tools they have in their app. So I think for Goldman, it's going to be a tough sell to make money. For Apple, I think they're less in it for the revenue and more in it for the long game of getting more people loyal to their phones, getting more people using Apple Pay. I think they're trying to play this long game to get deeper into our financial lives.
KELLY: That's Ted Rossman, industry analyst at creditcards.com, talking about the new Apple credit card.
Ted Rossman, thanks.
ROSSMAN: Thank you.
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