After more than six years on the market, Apple Card has turned out to be a challenge for its partner bank, Goldman Sachs. Recent reports suggest Goldman is looking to step back from this partnership, with JPMorgan Chase being a leading candidate to take over.
### Goldman Sachs’ Struggles
Goldman Sachs has faced significant losses with the Apple Card partnership, totaling at least $1 billion. The high number of subprime customers—those with credit scores below 660—has been a primary issue. Currently, about 34% of Apple Card users fall into this category, compared to 15% at JPMorgan Chase and 31% at Capital One.
Goldman also struggles with a delinquency rate of around 4%, higher than the industry average of 3.05%. The generous benefits of the Apple Card, which includes no foreign transaction fees and up to 3% cash back on certain purchases, have made it attractive but costly for the bank.
### Potential Changes Ahead
JPMorgan Chase is viewed as the most likely new partner, although no deal is finalized yet. One sticking point is the high percentage of subprime borrowers, which raises financial risks. For any transfer to happen, a new bank would likely seek a substantial discount to assume these risks.
If JPMorgan or another bank takes over, some experts speculate that changes might be inevitable. This includes possibly introducing late fees, adjusting cash-back offers, or tightening access to credit.
### The Apple Card Savings Account
A lesser-known aspect of the Apple Card is its Savings Account, also managed by Goldman Sachs. While this account is linked to the Apple Card, its future remains uncertain, especially since JPMorgan Chase does not currently offer high-yield savings. Goldman Sachs might continue this product even if the credit card partnership changes.
### Looking Forward
As discussions continue, many are watching the situation closely. The Apple Card partnership appears poised for significant change by 2026. In light of the losses and the economic landscape, it’s likely that the benefits and structure of the card may shift.
For more insights, The Wall Street Journal has reported extensively on this evolving story, shedding light on the broader implications for credit card partnerships in today’s financial climate.
In summary, while the future of the Apple Card partnership is uncertain, it’s clear that both Goldman Sachs and Apple must strategize carefully to navigate these challenges in the coming years.
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