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Apple has a history of changing the game; it could be argued that the iPhone alone changed life as we know it. But will the forthcoming Apple Card have the same large-scale impact in the world of payments and credit cards? Even if some of the features of the card, such as daily rewards and seamless app integration, eventually become credit card standards, will the Apple Card be the best card to use for actual Apple purchases?
The answer may surprise you.
While the Apple Card won’t be available until summer 2019, Apple has released the earnings structure: 3% cash back on Apple purchases, 2% cash back on all purchases made via Apple Pay and 1% cash back on other physical card purchases, all with no annual fee.
Getting 3% cash back on Apple purchases may sound good, but it isn’t abnormally great and certainly isn’t a ground-breaking amount for a card with no annual fee.
For reference, rewards credit cards without annual fees frequently have some rewards categories in the 2% – 5% cash back range. The Citi® Double Cash Card gives you 1% back when you buy and 1% when you pay. The Chase Freedom gives 5% cash back in capped rotating categories each quarter. The Bank of America Cash Rewards credit card lets you choose your own 3% cash back category each month (limited to your first $2,500 in combined purchases each quarter). And one of the best no annual fee cards out there, the Uber Visa, has multiple cash-back categories that go as high as 4% back on restaurants, takeout and bars, including UberEats.
But just like the Uber Visa is not the most rewarding card for Uber purchases, the Apple Card at 3% back isn’t always going to be the best card to use for Apple purchases for a couple of reasons.
The Most Rewarding Card for Apple Purchases
It’s hard to identify the single most rewarding credit card for making Apple purchases because there are so many places to buy Apple products, but let’s focus on when you buy directly from Apple.
The American Express® Business Gold Card is often the most rewarding card to use for purchases directly from Apple, awarding up to 4 Membership Rewards points per dollar spent on purchases made directly from select US technology providers of computer hardware, software and cloud solutions (Apple counts). The card pays 4 points per dollar in that category if it is one of your top two most utilized categories that month. 4X points apply to the first $150,000 in combined purchases from these 2 categories each calendar year. 4 points per dollar may not sound like much more than 3% back, but it actually is because each Membership Rewards point is worth 2 cents if maximized with transfers partners. That means potentially 8 cents in rewards earned per dollar spent on the Amex Business Gold Card vs. 3 cents cash back with the Apple Card.
Of course, not everyone has a small business credit card. US Bank’s Altitude Reserve Visa Infinite Card is currently the most rewarding personal rewards credit card for Apple purchases on an ongoing basis. One of its bonus categories is 3 points per dollar on purchases made using mobile payments, and the Apple Store accepts mobile payments. The points earned on this card are worth 1.5 cents each that you can easily use for travel booked directly with travel providers. This means you are getting 4.5 cents in travel for every one dollar spent at the Apple Store via this card when using the mobile payment feature. We have also seen mobile payments as a 5x rotating bonus category on the no annual fee Chase Freedom.
In fairness, the Amex Business Gold and Altitude Reserve Card both have annual fees. If you want to stack the Apple Card up against strictly no annual fee cards, the race is much tighter, with the edge tilting to the Apple Card in some cases.
Note that if you are buying an iPhone directly from your cell phone provider, the answer on which card is best to use for your Apple purchase is different, with one no annual fee option providing up to 5% back.
Note: No matter which card you use to purchase your Apple products, be sure you are also earning miles on the purchase, as online bonuses go as high as 5 miles per dollar and stack with your credit card’s earnings.
Purchase Protections Matter
Earning rewards on your Apple purchase is one thing, but I’d argue it isn’t actually the most important factor when deciding which credit card to use to buy the latest iPhone, Apple Watch or MacBook.
These purchases are pricey, easily sailing over $1,000 in many cases, and are exactly the types of purchases that I want protected by the built-in perks of my credit cards. My family has seen Apple products end up in the lake, stop working just after their included warranty period, and damaged in a bike accident. Even if you purchase Apple’s coverage, Apple Care only goes so far for some of these situations.
A number of credit cards, including some without an annual fee, provide fairly blanket purchase protections on electronics purchases for 120 days. If that bike spill that smashed the Apple Watch happened in the first four months, and you had used the right card to make the purchase, your credit card could cover the cost of a replacement. The Apple Card? Maybe not so much.
After the first 90 – 120 days, built-in card protections become more restrictive and no longer cover most types of accidents, theft, etc., but many still offer an extended one year warranty on top of the manufacturer’s warranty for defects. My family has used that additional year of coverage provided by the Ink Business Preferred Card when an iPhone developed a battery problem just after Apple’s one-year included warranty period ended.
We can’t say for sure yet if the Apple Card will have any types of built-in purchase protections or extended warranty benefits, but so far our Q&A with Apple made it seem like that was not a focus of the card.
(Also note that the credit card you use to pay your monthly cell phone bill can also provide protections if your iPhone is lost or damaged, regardless of how you originally bought the phone.)
We aren’t saying you shouldn’t get the fancy-looking titanium Apple Card when it is released (unless that ruins your 5/24 standing). Getting an almost immediate 3% cash back on Apple purchases via a card with no annual fee is good, and we’re sure that some of the other features will be fun for those who like to be on the cutting edge of all things Apple. But if you are looking for the absolute best card for Apple purchases, the Apple Card isn’t your answer.
You can earn significantly more rewards on Apple purchases with other cards and perhaps more importantly, get some protection against loss, damage, theft and old-fashioned breakdowns.
Know before you go.
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