How Apple Missed Its Chance to Fix Credit Cards
Apple announced a credit card last month. Credit cards are my jam—they’re unique tools in every company’s arsenal to acquire data, lock in users, and ultimately churn out cash. But despite my affinity for Apple products and most credit cards, the entirety of the Apple Card offering feels stuck in mediocrity. Not because the card itself is bad, but because Apple could have done so much better.
Let’s go through the new features, one by one:
American Express, Discover, Chase, Bank of America, and Barclay each have mobile-friendly credit card applications on their website, but sure, it’s a new native application on your iPhone.
This is nifty, but also not new. You can get instant card numbers right now with:
It is a step in the right direction for the industry, but I’m not sure the three-five business days we have to wait for some of our new credit cards every few years is really the massive issue many seem to think it is.
Below are screenshots from Amex, Capital One, and Chase’s mobile apps:
Each of these apps clearly display the total balance (what’s due) and the payment date (when it’s due) on the first screen when you log into their app. Is a slightly cleaner banking display really the cutting-edge design, innovation, and technology we’ve come to expect from Apple? I hope not.
The interest rate slider and bimonthly payment schedules are helpful, absolutely—any dense stack of credit card statements can be intimidating—and are a clear step in the right direction for empowering consumers.
You can text Chase directly at 24273. You can text Bank of America at 692632. While banks today offer text-first tools for checking your account balance, Apple is the first I’ve seen to integrate customer service into this channel. A gold star for them, I guess. I’m really trying here.
This is the first actual cool thing. About half of all credit card fraud claims are due to “unrecognized charges”—many of which are actually just people forgetting what they’ve purchased because they don’t recognize how it’s listed on the bill. Mint.com and dozens of other finance trackers have attempted to categorize spending data, but it all sucks.
Apple has a clear opportunity here to differentiate their card from other providers. I’m honestly surprised it didn’t launch a budget tracker alongside its new credit card. If you’re already categorizing the transactions (which is very hard), why not add a “goal” for each category?
This is just… fine? Flat cash back on a wide variety of categories, combined with Apple’s privacy-first ethos that disqualifies the sale of any of the spending data to data brokers or other tech companies and incentivizes daily use for every category all means Apple wants to be your “Everything Card.” But if Apple actually wants to be your everything card, why not actually compete with the other everything cards?
Maybe I over-optimize for credit card points. Maybe it’s all a sick, twisted game we credit card churners play, reading through subreddits and blogs to squeeze out an extra percentage back on a $20 dinner. But asking mostly affluent, financially-savvy people to give up their beloved Amex Platinum or Chase Sapphire Reserve for the “best Everything Card” is a tough ask, especially when the perks and social status associated with having an elite credit card made the New York Times.
Apple had the unique opportunity to completely destroy the entire credit card industry, and it looks like it’s about to blow it. Credit cards—and the banking system at large—are inherently racist and regressive, holding back millions of Americans from financial freedom. African Americans are given worse credit ratings than white people; 26 million “credit invisible” U.S. citizens are ignored by banks their entire lives because their parents couldn’t afford to co-sign their first credit card.
Credit cards hide racism in their rewards programs. The credit cards used by the financially privileged—the Amex Platinum, Chase Sapphire Reserve, to name a few—charge higher interchange fees to businesses in order to be able to afford generous cash-back programs for their mostly white users. People who use cash, debit cards, or less-exclusionary credit cards—the least financially privileged among us—cost businesses less money. The interchange fees on these cards can be as little as 25% of the more expensive cards (or nothing for cash). When accepting thousands of dollars every day, these interchange fees add up quickly, to the point where businesses are forced to increase prices for everyone to support the privilege of the few.
Credit cards are a regressive sales tax on society, fueled by financial illiteracy. Apple had the opportunity to wipe this practice out, offering the same perks—2% cash back, a fancy metal card—to the many millions of financially impoverished people in the United States. Unfortunately, while a number of the Apple Card features, like no late fees, clearer interest payment scheduling, and a competitive cash back rewards program, are certainly are a step in the right direction, not a single second of the 15-minute announcement was dedicated to the process that Goldman Sachs and Apple will use to approve users.
My guess: It’ll be more of the same, with Goldman Sachs excluding users based on credit scores and opaque algorithms. Apple hasn’t given any indication it’ll play a role in deciding which applicants are approved. Its advertised “low interest rates” are essentially industry standard.
Apple and Goldman Sachs built an Everything Card; 2% cash back on Apple Pay purchases and 1% back on purchases with the card is fine, and you can expect millions will use their Apple Card to charge all their purchases. But even with the resources of the world’s second-most valuable company, Apple didn’t do a great job.
Apple could have built the Everyone Card, democratizing access to the financial privileges of the elite.
Apple could have designed the entire card around a savings and budgeting product designed to educate users about investing for retirement.
Apple could have launched a credit card debt refinancer, bringing everybody’s debt under one roof with a lower interest rate paid off with one straightforward payment every month.
Apple could have offered to support cash and check deposits directly in Apple Wallet, killing the predatory payday loan industry and helping bank the tens of millions among us that don’t qualify for a traditional bank account. Cash App and Simple are already working toward this.
Apple could have announced that any iPhone owner would be eligible for the card, regardless of their credit score, using secured deposits on your Apple Pay as collateral for lines of credit to those society has deemed “unworthy.”
Apple could have broken the regressive tax of credit card rewards, locking everybody into an iPhone for life in the process.
Don’t get me wrong; some of these product decisions are certainly a step in the right direction, but for one of the world’s most valuable companies, it feels like Apple’s attempt fell short at the hands of fear. Fear of what exactly, I don’t know.
How Apple Missed Its Chance to Fix Credit Cards
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