OBSERVATIONS FROM THE FINTECH SNARK TANK
How did the card, which was launched in August 2019, do throughout 2020? Pretty well, it turns out.
According to a Cornerstone Advisors survey from December 2020, the number of Apple Card customers more than doubled over the course of the year. Cornerstone now estimates that 6.4 million Americans are Apple Card holders.
Who Has an Apple Card?
The demographics of Apple Card customers didn’t change significantly throughout 2020. Consumers in their 20s and 30s comprise 70% of Apple Card customers (as a point of reference, they represent 44% of all credit cardholders).
Apple did make some gains among Baby Boomers, however. At the beginning of 2020, Boomers accounted for just 3% of Apple Card holders—by the end of the year that percentage had more than doubled to 8%.
In addition, Apple made significant gains throughout 2020 in getting the Apple Card into the hands of women. At the start of the year, just 25% of cardholders were women. By December that percentage had grown to 42%.MORE FROMFORBES ADVISORThe Apple Credit Card 2020 ReviewByAsia MartinContributorThe Forbes Advisor Guide to Credit CardsByAsia MartinForbes Advisor Staff
This means that 80% of the new Apple Card customers that came on board in 2020 were women.
This is quite an accomplishment in light of the allegations brought against Apple in late 2019 that the company’s credit limit policies were sexist and that it discriminated against women.
Who’s Apple Card Competing With?
Not surprisingly, many Apple Card holders also a credit card from the leading issuers like American Express, Bank of America, and Capital One. The biggest competition for driving purchases to the Apple Card may not come from any of the major issuers, however.
Roughly half of all Apple Card holders also have a credit card from Amazon and PayPal, both of whom hold strong positions in eCommerce payments.
What’s Apple Doing to Build the Apple Card Business?
After making a big splash with its launch of the Apple Card, the company has been more subdued in its subsequent marketing efforts.
In late 2020, without any fanfare, Apple launched a web portal to take applications for the Apple Card. Prospective cardholders can use the site to determine if they’ll be approved (with no impact to their credit score) and apply for the Apple Card using their Apple ID. According to 9t05Mac:
“The ability to apply for Apple Card on the web comes after Apple launched a new web portal for paying Apple Card balances online in July. At the time, this was a notable expansion because Apple Card featured no web access, or access outside the Wallet app at all, when it first debuted.”
More recently, it announced Apple Card Family, which enables cardholders to share their Apple Card with other family members via iCloud Family Sharing. 9to5Macreported that Apple Card owners can:
“Invite other people to share their card and track everyone’s spending on the Wallet app. The card owner can set a spending limit for each invited user. Once this feature is available, Apple Card can be shared with family members who are 13 or older, and there will be dedicated options for parents to control their children’s spending.”
The Outlook For the Apple Card
Established credit card issuers compete on rewards (who can offer the most, tailored to cardholders’ preferences) or interest rate (for cardholders who typically revolve their card balances). Apple’s strategy is different.
Apple is competing on ecosystem.
Instead of offering 3% (or whatever) on travel, restaurants, groceries—like the rest of the market—Apple is offering 3% back on spending with selected partners (Uber, Uber Eats, T-Mobile).
And by providing rewards in the form of Apple Pay funds, it helps to fuel the volume of those payments.
No other issuer in the market can pursue that strategy.
And unlike other issuers, who offer different cards targeted at different segments of the market, Apple has gained a toehold with two very different segments—the low end and the high end—with a single card.
The concentration of Apple Card holders among the Gen Z and Millennial segments may be a shortcoming for other card issuers, but it’s an advantage for Apple.
The Coming Credit Card Boom
Predictions of the death (or decline) of credit cards grow louder with every dip in the economy. The doomsayers always ignore consumers’ changing behaviors—and their historically unchanging attitudes.
Among consumers with just one credit card, about six in 10 pay off the full balance monthly. Surprisingly, that percentage is roughly even across the generations.
In 2014, not long after the Motley Fool article was published, I correctly predicted a credit card boom, arguing that Millennials would fuel a five-year growth spurt in credit card ownership and usage.
The emerging number of Gen Zers, the quest for rewards, and the launch of new credit building cards will combine to not just keep credit cards afloat, but drive them past debit cards throughout this decade.
Six years later, it’s the Gen Zers turn to drive the credit card rocket ship.
In 2016, a Bankrate survey found that less than a third of Millennials had a credit card. CNN quoted one expert as saying “”Millennials have been stigmatized by debt.”
According to Cornerstone Advisors most recent study, two-thirds of Millennials now have at least one credit card, and 40% have two or more.
So much for being stigmatized.
Of the roughly 22 million Gen Zers between 21 and 25 years old, 57% have at least one credit card, with 25% holding two or more.