Everyone Can Use an iPhone, But an Apple Card Isn’t for Everyone

apple goldman sachs

Full Disclosure: I love my iPhone. It is a paid-in-full iPhone XS Max that is six years old and works like a champ. Sooner or later, Apple will stop updating the device, but until then, my investment is on the right side of the power curve. I also have an Apple credit card. It has never had more than $80 posted in a month. I used the physical card only once and never paid any interest. 

The Sour Apple Card

When it re-vamped its credit card co-brand, initially with Barclaycard, and then moved to Goldman Sachs, it promised it was a “new kind of credit card created by Apple and designed to help customers lead a healthier financial life.” 

However, for Apple’s partner, Goldman Sachs, the credit card was a new kind of business line, but it became a less-than-healthy financial investment for Goldman. The WSJ covers the latest turmoil, as Goldman Sachs offloads their failed GM credit card and wonders what to do with its $17 billion Apple card receivable.

The title sets the stage, as the WSJ frames the story: “Goldman’s Credit-Card Exit Hampered by Lax Lending Standards” subtitled “The bank lent loosely on some credit cards, contributing to a big loss as it tries to sell the General Motors card business.”

First, Get the GM Mess Out of the Way

Ouch. More than 2x the current chargeoff trend, says the WSJ. Things did not look this way when Capital One owned the GM co-brand.

The Apple Portfolio is Nine Times Larger Than the GM Portfolio

Where This is Going

Call me old-school, but credit quality matters. It has to be earned through the blood, sweat, and tears of rigorous standards and discipline. Goldman Sachs has a mess on its hands, and we think the worst is yet to come.

But for me, I’ll take my 6-year old, paid in full iPhone anytime. And, I will keep my 800 FICO Score, too.

As to breakups in co-brands, read our latest here: Disbanded Co-Brands: When Credit Card Joint Ventures Fail | Javelin (javelinstrategy.com)

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