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Through the launch of
The feature enables Apple to reach consumers who may have thin credit histories, and to enable spending for consumers as young as 13 years old.
"When there were two holders of a credit card, one got the benefit of building a good credit history and the other did not," Apple CEO Tim Cook said in opening Apple's product launch virtual presentation Tuesday. "We want to reinvent the way this works, too."
Apple Card will now allow spouses and partners to share and merge their credit lines and have equal rights on their account and build a credit score equally, Cook said. "This solution helps to deliver financial equity and it's a game changer."
Parents have the option to establish spending limits and other controls for younger family members. "These benefits are our ongoing mission to reinvent the credit card and help you and those close to you experience a healthier financial life," Cook said.
The card account's owner can enable two levels of access. "Spending only" allows purchasing but does not provide visibility into the account's balance and transaction history, according to
Apple Card already reaches new consumers by enabling users to apply within the Wallet app on their iPhone, and use the same app to track spending and pay off their balance. Rewards are more standard, with a focus on rewarding purchases within Apple's ecosystem.
Some credit card issuers may report the payment history of the credit card to credit bureaus for both the cardholder and the authorized user. This allows an authorized user to earn payment history for the card's use and build their credit score with every on-time payment.
That process is often used to help an additional member of the family, like a college student, establish a stable credit history, said Brian Riley, director of card services for Mercator Advisory Group.
"Credit scores are generally based on the primary borrower, and the secondary borrower is just a soft pull," Riley said. "There are not co-borrowers with a credit card, and you typically don't use the secondary party to outweigh the first."
Apple Card Family does represent a feature not common in the credit card industry in merging credit lines in which one party associated with the credit card cannot affect the credit history of the other, Riley said.
"The lawyers at Apple certainly had to check the Fair Credit Reporting Act to see if credit lines could actually be switched, or in this case, merged because you generally can't transfer scores," Riley added. "You're negating the primary credit score on the account, and the other thing is that FICO is the driving factor on most credit scores and there are also limitations on marital status, so does that get invoked here?"
