heavycreditcards

It’s Not a Good Credit Card. It’s Just Heavy.

The Apple Card is made of titanium and offers consumers very little. It's just the latest in a very dumb trend of useless metal status rectangles

Somehow, a rectangle made of stainless steel is one of the most baller financial status symbols on earth. The metal credit card has heft. It has weight. It has plunk. It has thunk. And, deservedly or not, it has respect. Like AirPods, it is the ultimate fake-rich-person flex. Slapping one down on a restaurant table immediately rockets you into the upper echelon of high rollers. Why? The card weighs more, so it communicates that the owner has a big ol’ honkin’ hog and the requisite energy to haul it.

But also, there’s the exclusivity thing. Metal cards were originally designed for ultra-wealthy people and big spenders who are not you, and the application process is harder for regulars to pass. Some charge an annual fee upward of $500 (offset by things like a travel credit) and hefty interest rates for those who can’t pay it off monthly. They lure you in with big bonuses for spending thousands of dollars in a few months, then make those “points” near-impossible to understand and utilize.

Anyway, this is a story about Apple, and its new credit card, which is made of titanium and offers very little.

The Apple Card will be available this summer. It boasts no annual fee, unlike most prestige cards. It’s built into Apple Pay, which isn’t as ubiquitous as you’d expect in 2019, and offers 2 percent back (3 percent on Apple products). It promises low rates, but the rates (13.24 percent to 24.24 percent) are average.

What’s more, the whole cash-back system is dumb.

Scott Keyes of Scott’s Cheap Flights is a points expert with over 25 open credit cards, but he tells MEL he’d avoid the Apple Card. “Unless the majority of your monthly budget is spent buying iPhones, Apple’s new credit card with Goldman Sachs is nowhere near the most lucrative card for most consumers,” he says. “Virtually every perk the card carries (2 percent cash back! Budget-tracking tools! A fancy metal card!) already exists in the marketplace, often at higher cash-back rates or with better rewards.”

He adds, “Apple excels at creating a network effect by seamlessly integrating new products into your existing suite of Apple products, and this card is certainly an effort towards that. But that benefit notwithstanding, I think cash-back cards with no sign-on bonus, like Apple’s, are a pretty terrible deal for most people.”

Getting a few bucks back with every Apple purchase is pretty pathetic, Keyes points out: “Let’s say you want to visit Europe. An average flight costs $750 roundtrip. You would have to spend $25,000 in the Apple Store — 25 top-shelf iPhones — in order to get enough cash back for that Europe flight.”

When it comes to credit cards, he says, the real value is in the hefty point bonuses, which turn into thousands of dollars if you actually cash them in (and pay off your card every month!). “Tons of airline and travel credit cards offer 60,000-point signup bonuses — enough for a free flight to Europe — just by opening the card and meeting the spending threshold, typically around $3,000 in three months,” Keyes says. “In other words, with a typical signup bonus you’re receiving 20 points per dollar spent, rather than a measly 3 points.”

The real appeal with the Apple Card, frankly, is status: having the shiny, prestigious new Apple thing. It’s why new iPhones fly off the shelves when the old ones work perfectly fine. But if everyone is making metal credit cards — and they’re now available from lots of major credit card companies — obviously that raises at least one question: If we can all get our greedy little fingerprint smudges on one, how special can they be? Not very.

The cards may be easier to get, but they aren’t necessarily better. They’re just heavier.

Metal credit cards are often ranked not just by perks and fees, but by their weight in grams. The JPMorgan Reserve card weighs in at 27g, while WellsFargo’s Propel American Express Card is a mere 10g. Imagine being the poor schmuck at the group dinner at bill time whipping out that lightweight! Cards are also ranked by which ones are the strongest — that is, the “least bendy” — which I would definitely mention on a date.

Credit cards should be evaluated based on things like annual fees, interest rate and rewards, such as whether you’re into travel, purchases or cash.

Of course, if this is your first card, or a card you need to establish or rebuild good credit, you’re still going to look for no annual fee, a low interest rate and rewards that fit your lifestyle. You should avoid things like store-based retail cards and try to find a card that will actually hook you up for paying on time, or make it easier to do so, either by waiving late fees (Apple gains points here) or offering incentives for on-time payments. But I still wouldn’t recommend the Apple Card, unless you’re a corporation buying MacBook Pros by the hundred. Its benefits are largely limited to the Apple ecosystem, and for what it’s offering in terms of spending management, there’s the free software Mint.

How’d we reach this frenzy over heavy metal cards anyway? Blame American Express.

Lots of people on social media have called out Apple’s titanium card as the second coming of Fyre Fest fraudster Billy McFarland’s Magnises card, a “black card for millennials” that granted access into lackluster events for a $250 yearly fee. The card itself did nothing, Forbes reported: It “isn’t a credit card at all. The metal rectangle simply duplicates the magnetic strip from your actual credit card so you can swipe with style.”

But AmEx started this whole thing with its “Black Card,” actually called the Centurion, which was released as an invite-only metal card in 1999. You allegedly had to spend (not make! Spend!) over six figures on an existing American Express card to even be asked to apply.

And it was the Chase Sapphire Reserve metal card, released in 2016, that broke the internet. It was so in-demand that Chase ran out of the metal to make the card after getting hit with tens of thousands of applications, mostly from millennials, within two days of its debut. (Some people got a temporary plastic card until they could upgrade to metal, and hoo boy.) The CSR is heavy on travel and dining rewards; it initially offered a 100,000-point bonus (now 50,000 and only after you spend $4,000 in three months) but charged a $450 yearly fee, mitigated by an automatic $300 travel credit. It kicked off a bizarro credit card unboxing trend on YouTube.

Now, to be clear, if you regularly spend money on travel and dining, the Chase Sapphire Reserve is still listed as one of the best cards on the market for rewards points, and the one of the best cards on the metal market.

But if you look at the best credit cards for 2019 in general, many of them still come in — shudder — plastic. It’s important to understand that you need to be a big enough spender to do the things to get the rewards and not saddle yourself with debt and interest payments when you can’t pay it off every month. In other words, lots of high-end cards offer bonus points it’s difficult to claim unless you travel or shop like a truly wealthy person.

So, then, what, exactly, is behind the appeal? “People will seldom admit they took a card out just because of what it feels like in their hand, but there’s no doubt subconsciously it makes a big difference,” Gerard du Toit, a partner at consulting firm Bain & Company, told MarketWatch of the metal trend.

That is also true of platinum credit cards in general. In 2017, research by economists at high-status schools such as Harvard University found that consumers were willing to pay higher fees for platinum credit cards even when “a nondescript control product with identical benefits” was offered. They sometimes even used the platinum card in situations where they would appear wealthy, even if the perk wouldn’t be earned in that scenario (like using the platinum card at a restaurant in front of your friends when another, less prestigious card in your wallet conferred better rewards).

All of this came down, of course, to self-esteem. When the researchers cross-referenced the spending habits of the consumers in question with psychological testing, they found that those willing to pay more for a status-y thing such as a high-end credit card typically have lower self-esteem. The higher one’s self-esteem, the less a person seeks out high-status goods.

Now, here is where credit card users will talk about the points game and gaming the system so that you can maximize rewards and perks through a series of strategic moves. That’s real and true, and it seems the industry is catching on: Many credit card companies have been pulling back lately on exactly those advantages in response to consumers gaming the system and figuring out how to stack travel points here and avoid interest fees there. “Once you’ve received a signup bonus, it’s far more efficient to open a new card and direct any purchases towards a signup-bonus spending threshold than it is to focus on bonus spending categories like restaurants or groceries,” says Keyes, who used that strategy to fly around the world for free in 2015.

This makes it all the more important that we shrewdly evaluate credit cards on the real fine print of what they can do for us. As has been noted, the Apple Card doesn’t have insane perks. The only real distinguishing aspect is the fact that it’s actually a digital card most of the time. It lives in Apple Wallet and is to be used just like Apple Pay. The physical card, which has no numbers, needs no CVV, has no signature and doesn’t expire, is really for places that don’t accept payment via Apple Pay. (It’s also great for Instagram; there’s no info to steal.)

In other words, the least interesting thing about it is the titanium. Which means the prestige here is not the material; it’s still the Apple brand. It’s almost as if the titanium metal card is just an empty status symbol.