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Color of Money: I'm not impressed with the Apple Card cash-back reward. Here's why.

Michelle Singletary on

WASHINGTON -- Please, don't fall for the hype around credit cards that give you cash back. The psychology behind this perk is all about getting you to spend more money.

There's been so much buzz lately about the newly introduced Apple Card. In particular, Apple touts the card's "compelling cash-back rewards program."

OK, let's look at Apple's cash-back feature.

-- Customers will receive 2% back every time they use Apple Card with its mobile wallet Apple Pay.

-- Card carriers get 3% cash back if they use the card for purchases made directly with Apple -- including at Apple Stores, apple.com, the App Store, the iTunes Store and for Apple services.

-- Apple recently announced that card users would also receive 3% cash back when they use the Apple credit card with Apple Pay for Uber and Uber Eats.

 

-- For purchases made with the physical titanium card, customers will get 1% back.

Getting cash back seems like a win/win situation for credit issuers and consumers.

Lenders get money from merchants when consumers use their cards (although many businesses are passing along the processing fee either directly or in higher prices). And if a cardholder doesn't pay off the bill in full, the card issuer collects interest. The variable interest rates on the Apple Card as of Aug. 2 ranged from 12.99% to 23.99%, according to the company.

Consumers love cash back offers, boasting that they get free money for purchases they had planned to make anyway. I'll concede that you may be actually getting a reward if your charges are for necessities. But are they?

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