There’s a new must-have accessory to compliment your hipster lifestyle and I know I’ve just got to have it. We’re talking the Apple Card and boy is it hot. It’s titanium, it doesn’t have any old-school digits on the front and it lives on a phone. So chic. But how does it hold up earnings-wise to the old stalwart of the points and miles game, the Chase Sapphire/Freedom Duo? Let’s find out!
Apple Card Basics
Before talking Chase, let’s run over the Apple Card basics. We’ve got a current signup bonus of $0, which, is pretty lame. One will further earn 3% cash back on Apple purchases, a just-announced 3% on Uber, 2 on all transactions made via Apple Pay and 1% on everything else.
These earn categories lead us to a question that friends and family members always ask when they hear I play the points game: “So what kind of credit card should I get?” My answer to this is always the same. “Good question, give me a percentage breakdown of your previous full-years spend by category and whether or not you anticipate any spending pattern changes”. They usually look confused, I look smug, it’s a bad time all around. The point being: there is no universal answer. It’s like asking what kind of vehicle to get, along with no other information. Do you have a family to haul? Do you need to haul things? Do you want to wear a bag over your head for fear of being seen in your truck? The point being, is that our personal requirements drive the decision.
Asking what credit card to get is like asking what kind of vehicle to purchase
As it pertains to the Apple Card, one person could claim the earn rate is great while another could claim it’s terrible, and they’d both be correct. It just depends on your spend. Do you spend $20,000 per year on Apple products? If yes, then this card makes sense. Do you spend $20,000 a year on overseas travel? If yes, then the Sapphire Preferred is the better option.
Taking a look at the Apple Card’s terms and conditions and we see some pretty standard stuff. An APR of 12.99 to 23.99%, a 28-day grace period and most-excellently, no fees. I’m assuming this includes foreign transaction ones, but would like to see that explicitly stated somewhere.
Good question, give me a percentage breakdown of your previous full-years spend by category and whether or not you anticipate any spending pattern changes
Like everything Apple, they’re going for simplicity here. It appears to be an Apple Wallet based virtual card first, and a titanium physical one second. So it looks nice, appears simple to use and has a totally respectable earn rate. Not too bad.
The Chase Sapphire/Freedom Duo
Before getting into the raw numbers, let’s talk about why we picked these two cards. The Chase Sapphire Preferred: many players have lost their points and miles virginity to this piece of plastic. This card is included because it provides one access to Chase’s outstanding Ultimate Rewards program, and provides a nice, everyday bonus on travel and dining. What’s more, Chase’s definition of travel is broad, everything from Ubers, trains, airfare, hotels, its all included. And, it’s a worldwide bonus category. Finally, use of this card overseas won’t trigger any obnoxious foreign transaction fees. I chose the $95 Sapphire Preferred over the $450 Sapphire Reserve because I’m assuming those looking at the fee-free Apple Card have no interest in the premium credit card market. Even though I could make a value case for the more-expensive option.
The Chase Freedom Unlimited is used for everything else. It earns a flat 1.5% on all purchases. Now, I get it, managing even two cards might come across as cumbersome. Especially for those who value the Apple card for it’s simplicity. But it’s really not hard, and once you learn the basics, it becomes second nature. The basic rules are; If we’re outside of the country or paying for travel or dining, we’re using our Sapphire Preferred. For everything else, we use our Freedom Unlimited.
How the Game is Played
Learning the points and miles game is a bit like learning to drive a car. As someone who’s presumably been doing it for some time, it’s probably all muscle memory by now. But when you were 15 or 16, there were a ton of things to learn. How to manipulate a clutch, who has the right of way, what do all the signs mean, what’s proper signal distance? But once it becomes part of your daily life, you don’t think about it any longer. And that’s really how the points and miles game is played. Easy, right?
Like I’ve done before, I want to show you guys some real-world numbers, and what kind of earning we can expect when using either option. I’m going use my personal 2018 full-years spending patterns, and apply those percentages to a hypothetical $20,000 annually.
This time around, it gets a little tricky because I don’t have good data surrounding Apple Pay usage rates. To fill in for this gap, the number 65 comes into play. This is the percentage of US retailers which currently accept phone-based payments. At least according to a January 2019 Apple press release. Accordingly, I’ll use that as the number of merchants who would have earned the Apple Card’s 2 points per dollar had I really been trying. To put this another way, we’re going to say that the Apple Card earns 1.65¢ per dollar on everyday purchases.
Apple Card vs Chase Sapphire Preferred Duo Yearly Earnings
With these assumptions in mind, let’s look at the results. We have a gross earn of $332 on the Apple card and $314 for the Chase Sapphire Freedom Duo. So, for some people, this may be enough to call it. The new card from Apple beats the duo from Chase when just looking at earn from everyday spend. However, I think it’s a bit more complicated.
I said earlier that I’d limit the value of an Ultimate Reward to it’s cash-back value, just one cent. But what if we were to get a little crazy, and acknowledge the fact that Chase allows Sapphire Preferred cardholders to redeem for 1.25¢ per point via the Expedia-powered Ultimate Rewards travel portal. We’re now looking at $332 in value from the Apple Card and $392 from the Chase Duo.
Apple vs Chase Card Benefits
Moving on from return on spend, let’s talk purchase protection. The Apple Card is lacking in both execution and information here. Apple’s website doesn’t mention the topic. Neither does the terms of service. The only data I could find comes from the card’s payment processor, Mastercard. It looks about as bare-bones as one could imagine. We’ve got some basic liability protection, some ID theft coverage, a Shoprunner membership and some other dumb things like Priceless Cities and Golf that will most likely go unused. Overall, a disappointment.
Quite oppositely, The Chase Sapphire Freedom duo has some of the best card benefits available. $10,000 per person trip interruption coverage, a primary rental car collision damage waiver, baggage delay insurance, $500 trip delay coverage, $500 per claim purchase protection and warranty extensions of 1 year. In other words, when it comes to card-provided piece of mind, the Apple Card doesn’t even feel like it’s playing in the same league as the Chase Sapphire Freedom Duo.
Apple vs Chase Card Yearly Net Earnings
Before we start wrapping things up, let’s look at net year one value. The Chase setup is going to come with some annual fees, but will make up for that with signup bonuses. The Apple card has neither, which I suppose is both good and bad. The Sapphire Preferred is currently offering 60,000 Ultimate Rewards after a kind-of-high $4,000 minimum spend. The Chase Freedom Unlimited is offering 3 points per dollar on the first 20,000 in spend.
We’ve got an intro bonus of $0 on the Apple Card and $600 from the Sapphire Preferred. Year one return on spend is the previously mentioned $332 on the Apple card and $560 on the Duo. The latter’s increase is due to the Freedom Unlimited’s year-one, 3 point per dollar signup bonus. I’m assigning a value of $0 to the Apple Card’s purchase protection, or lack thereof, and $50 to the Sapphire Duo. It’s a bit arbitrary, but more than anything I just wanted to acknowledge how much better it is. The cost of the cards is next, $0 for Apple and $95 for the Sapphire Preferred.
Ok, year one is a blowout, the Chase Sapphire Freedom duo beats the Apple Card by $782. To be honest, this is not at all unexpected. That’s what signup bonuses will do. They massively skew year one net valuations. Also, keep in mind, this is with an undervalue of Ultimate Rewards. I personally peg them at 2.19¢ per point. At that valuation level, instead of beating the Apple Card by $782, Chase wins by $2,163. This is like major league vs little league. It’s not even close.
Moving on to year two, and things even out. With intro bonuses gone and Ultimate Rewards valued at 1¢ each, the Apple Card wins by $63.
I like the Apple Card, but it’s not for me. It’s got some great features. From everything I read, Apple is trying to make keeping track of spending as easy as looking through some iMessages. For some, there might be a lot of value in this. Apple also makes earnings available immediately via daily cash. I like that, but feel its more of a novelty than a decision altering feature. Furthermore, I really like the fact that help is just an SMS away, I wish Chase would do that.
When it comes to second-year earnings, and a cash-out valuation of Ultimate Rewards, the Apple Card does very well, beating the Chase Duo. But to get to that point, we had to drop the value of Chase points below what I believe they’re worth.
The Apple Card vs the Chase Sapphire Freedom Duo is a bit like the old Mac vs Windows debate. You might get more for your money with the Microsoft-based platform, but Mac and it’s iOS integration sure makes life easy. And that’s exactly who I think the Apple Card is great for. People who just say “look, I want a card that doesn’t screw me over earnings-wise and that I don’t have to think about”. The points game does take some work, and for the people like me who play, it can be kind of fun. But other’s might have different priorities. For me, I’m sticking with Chase. But I definitely won’t be rolling my eyes at anyone breaking out their new Apple Card.