The Apple “Credit Card”

Apple Inc. which is the most valuable company in the world is known for selling high tech products. Over the years, Apple products have become a cult following, and many consumers blindly purchase whatever new products the company introduces.

This time Apple has surprised its investors and customers. All analysts were expecting the company to unveil some kind of shiny new gadget or mobile app.

However, Apple has decided to dilute its focus and diversify. Apple surprised the world by offering a financial services product, i.e. the ’credit card.“

The Apple credit card is no longer a figment of the imagination. Instead, it is something that consumers will be able to use very soon.

In this article, we will have a closer look at some of the features of Apple credit cards as well as the reason behind the company’s venture into this new service line.

How Does The Apple Credit Card Work?

Apple has made an attempt to redesign how credit cards work. It needs to be understood that Apple is the main brand that will power the sales and distribution of this credit card.

However, Apple is not launching this card alone. The company has partnered with other financial bigwigs such as Goldman Sachs and MasterCard. Goldman Sachs will provide the banking know-how to enable Apple to run a successful credit card business.

At the same time, the alliance with MasterCard will make the product more acceptable. Apple has announced that its credit card will work at all online as well as offline locations wherever MasterCard is accepted.

Some other salient features of the Apple credit card will be as follows:

  • Apple will ensure that it does indulge in financial largesse which has given other credit card companies a bad name. The Apple credit card will have no joining fee or annual fee.

    Also, many credit card companies hike interest rates whenever customers miss payments. Apple will not be following that practice. Apple will continue to charge the 13% to 24% interest on the outstanding balance even in the case of a missed payment.

  • Since Apple is committed to protecting the privacy of its customers, it has proclaimed that it will not be selling the data related to how its customers spend money.
  • Also, the credit card will have a completely different look and feel as compared to other credit cards. The card will be made out of aluminium and will only have the name of the consumer embossed on it. Apple wants to simplify credit card payments like it has simplified other technology.

    Hence, other details like the card number, expiration date, and the CVV code will not be printed on the card.

  • The Apple card will be available in the physical form as well as the virtual form. The physical card will provide 1% cash back on purchases. On the other hand, the virtual card will provide a 2% cash back on purchases. However, if the card is used to buy Apple products the cashback provided will be 3%.
  • Lastly, Apple has redesigned the entire credit card experience. Its app will track the balance due on the card and the categories that the money has been spent on. The app will also provide analytics details which will display to the users where they have spent their money and how much interest they are likely to pay on it. Apple is hopeful that such features will help them to enable their customers to make more advised financial decisions.

Some of the above features provided by Apple credit card and pretty exceptional whereas many others are simply run-of-the-mill. However, the more important question is that why is Apple venturing into the credit card domain.

Why Did The Company Start Offering Credit Cards?

  • Dwindling Profits: Many financial analysts are of the opinion that Apple Inc. is having a hard time maintaining its profits. The sales of the iPhone and the iPad have started dwindling. Also, the company’s research and development department haven’t really made any breakthrough. Hence, the company faces an uphill task of rejuvenating the profits without any new product launch. This exceptional situation guided Apple towards the credit cards business which is known for its higher risks and higher margins.
  • Excess Cash Reserves: Apple is known to be the most cash-rich company in the world. It has more than $245 billion in cash just lying around. There are not many acquisition targets for Apple either. Hence, at the present moment, this money is invested in low-interest rates securities. Since Apple has such a huge pile of cash, cash-intensive businesses like credit cards post no real barriers to entry for the company.
  • Stellar Brand Loyalty: Also, Apple’s consumers are known to be cult followers of the brand. They religiously queue up to buy whichever product is being sold by the company.

    Apple is confident that its stellar brand loyalty will help make its credit card an instant success.

    This is the first time that Apple is using its brand to sell something which is not technical. Hence, it would be interesting to see whether this brand extension dilutes the brand equity of this humungous corporation.

Apple’s foray into the credit card business is an interesting turn of events. If the company succeeds with the credit card business, it may also foray into a lot of unrelated businesses and will ultimately morph into a conglomerate.

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