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Is the Apple Card worth the hype?

Source: Apple

Loyal Apple consumers may wonder if the Apple Card lives up to the hype and whether the no-fee card is truly the best choice for Apple purchases.

Below, CNBC Select breaks down all you need to know about the Apple Card — from the cash-back program to fees, payments, fine print, privacy and security.

Apple Card

Apple Card
Apply Now
On Apple's secure website.
  • Annual fee

    $0

  • Rewards

    3% cash back on goods or services purchased directly from Apple (including Apple retail stores, the Apple online store, the App Store, iTunes, Apple Music and other Apple-owned properties) on Uber and UberEats, at Walgreens and Duane Reade stores, on the Walgreens app and on walgreens.com and in T-Mobile stores, 2% cash back on Apple Pay purchases and 1% cash back on all other purchases

  • Welcome bonus

    None

  • Intro APR

    None

  • Variable APR

    12.74% to 23.74%

  • Balance transfer fee

    None

  • Foreign transaction fee

    None

  • Estimated cash back earned after 1 year

    $231*

  • Estimated cash back earned after 5 years

    $1,153

Pros

  • No annual fee
  • 3% cash back on goods or services purchased directly from Apple and on Uber and UberEats purchases
  • No foreign transaction fee
  • No late payment fee

Cons

  • Apple Pay isn’t accepted everywhere
  • Purchases with the physical card only earn 1% cash back
  • No special financing offers or welcome bonus

Who's this for? The Apple Card has generated a lot of buzz with its unique "Daily Cash" program and quirks of its titanium card. The card was created with the dedicated iPhone user in mind and has a cash-back program tailored to fans of Apple products and services.

You'll earn the most cash back (3%) on goods or services purchased directly from Apple (including Apple retail stores, the Apple online store, the App Store, iTunes, Apple Music and other Apple-owned properties), Walgreens and Duane Reade stores, on the Walgreens app and on walgreens.com and on Uber and UberEats. All purchases made with Apple Pay earn 2% cash back, and you earn 1% cash back when paying with the physical Apple Card.

Who's this for? The Apple Card has generated a lot of buzz with its unique "Daily Cash" program and quirks of its titanium card. The card was created with the dedicated iPhone user in mind and has a cash-back program tailored to fans of Apple products and services.

You'll earn the most cash back (3%) on goods or services purchased directly from Apple (including Apple retail stores, the Apple online store, the App Store, iTunes, Apple Music and other Apple-owned properties), Walgreens and Duane Reade stores, on the Walgreens app and on walgreens.com and on Uber and UberEats. All purchases made with Apple Pay earn 2% cash back, and you earn 1% cash back when paying with the physical Apple Card.

*To calculate the rewards you could earn using your Apple Pay card, we assumed that cardholders will use Apple Pay for 70% of their purchases at a rate of 2% cash back, since 70% of all merchants accept Apple Pay, according to an Apple spokesperson. We also assumed the cardholder would use the physical Apple Card for the other 30% of their purchases at a rate of 1% cash back. You may earn a higher or lower return depending on your spending habits.

read more
Apply Now
On Apple's secure website.

How the cash-back program works

Apple refers to cash back as "Daily Cash," and cardholders can earn it at a rate of 3% cash back on goods or services purchased directly from Apple (including Apple retail stores, the Apple online store, the App Store, iTunes, Apple Music and other Apple-owned properties) on Uber and UberEats, at Walgreens and Duane Reade stores, on the Walgreens app and on walgreens.com and in T-Mobile stores, 2% cash back on Apple Pay purchases and 1% cash back on all other purchases. There is no welcome bonus for this card.

The cash-back program is competitive, but it isn't the highest earning on Apple purchases. The U.S. Bank Cash+™ Visa Signature® Card offers 5% cash back in two categories of your choosing, on up to $2,000 in combined purchases a quarter. According to a U.S. Bank spokesperson, the card's "electronics stores" category includes Apple Store in-store and online purchases while the "TV, internet and streaming services" category includes most purchases made through the App Store, Apple Music and iTunes.

Daily Cash automatically deposited into your Apple Cash card (located in the Wallet app) at the end of every night, once the transaction is posted to your account. Any transaction that is still pending won't post at the end of the next day.

Daily Cash can be used in a number of ways: applied as a statement credit to your Apple Card balance, spent like cash through Apple Pay, transferred to a bank account or sent to friends via iMessage. Unlike some rewards cards, the value of Daily Cash is the same, no matter how you redeem it.

If you don't have an active Apple Cash card, your cash back accrues in your Apple Card account, and you can manually redeem it through the Wallet app.

The Apple Card's fees

The Apple Card is one of the few cards on the market that has no fees whatsoever. There are no annual fees, no foreign transaction fees and no late payment fees.

That said, you can still incur interest charges if you don't pay your bill in full every month. The current variable APR is 12.99% to 23.99% based on your creditworthiness, which is pretty similar to other cards.

Unfortunately, this card doesn't offer any interest-free financing options, so if you use it to pay for big ticket purchases, such as a new iPhone 11, you'll want to pay the balance in full so you don't incur interest.

If you want to pay off new purchases over time, consider the Chase Freedom Unlimited®, which offers a 0% APR for the first 15 months from account opening (then a 16.74% to 25.49% variable APR).

How payments work with the Apple Card

All payments toward your Apple Card balance are done through the Wallet app. There is no online site or separate app. The Apple Card has user-friendly financial wellness tools that show users exactly how much it will cost if they carry a balance, so you know the consequences of not paying in full.

When you navigate to payments in the Wallet app, there's a simulation wheel with a "payment nudge" that allows you to select a payment amount and see how much interest you'd be charged for the given payment. You can adjust the "nudge" by sliding it with your finger to see what the interest would be if you only paid the minimum due, one third of your balance or any other amount.

When you want to make a payment, you can schedule it for a future date or immediately. Link an external bank account or use the money in your Apple Cash account to pay your bill.

To view a detailed snapshot of your spending history in real-time, Apple categorizes purchases by color so you can track your spending weekly or monthly. You can also see where and when you made the purchases, plus the transaction cost.

The Apple Card's privacy and security features

Apple is known for keeping consumers' data private, and the company continues that mission with Apple Card through advanced security measures that protect cardholders' privacy. Each transaction made with the digital Apple Card requires your device number and a one‑time, dynamic security code, which is authorized via Face ID, Touch ID or passcode.

Purchases made with the physical card are secured with chip technology. Plus the physical card has no numbers on it — no card number, security code or expiration date — which makes it practically impossible for someone to steal your information when you hand your card to pay.

While the physical Apple Card has no card number, that doesn't prevent you from completing online transactions. If an online merchant doesn't support Apple Pay, and you need to enter your card number to complete a purchase, simply access that information through the Wallet app. After clicking on your Apple Card, select the three dots on the top right and navigate to "Card Information," which will display your card number, expiration and security code.

Similar to other cards, if you misplace your card, you have the option to freeze it and request a replacement — which can be done directly from the Wallet app.

If you're concerned about which parties can view your transaction data, rest assured Apple states it won't look at your transaction data, though Goldman Sachs does have access to it for operational purposes, such as reviewing transactions for fraudulent activity. However, Goldman Sachs will never share or sell your data to third parties.

Fine print

According to the Apple Card's cardmember agreement, if you modify or "jailbreak" your iPhone, you may no longer be eligible to access or manage your Apple Card.

Bottom line

The Apple Card is a great choice for loyal fans of the brand who are looking for a card that seamlessly integrates with the Wallet app. If you want to earn competitive rewards on Apple, Walgreens, T-Mobile Uber and UberEats purchases, this card can earn you unlimited 3% cash back.

This card has a leg up on many other rewards cards with its unique Daily Cash program, which is perfect for consumers looking for the flexibility to redeem rewards within a few days of earning them. Plus the entirely no-fee structure and user-friendly payment tools are a great way to save cardholders money and encourage payments to be made in full.

However, if you lack an iPhone or want a card with an introductory 0% APR period, you should check out alternative rewards credit cards or balance transfer cards. Also note that while Apple Pay is accepted at 70% of merchants, according to a company spokesperson, you may run into trouble using it everywhere. Therefore, it may be a good idea to also carry a flat-rate cash-back card that offers more than 1% cash back on everyday purchases.

The Alliant Cashback Visa® Signature Credit Card (3% unlimited cash back on all purchases during the first year; 2.5% on all purchases after) or Citi® Double Cash Card (2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases) are our top two alternatives.

Information about the Alliant Cashback Visa® Signature Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.