Why are they splitting up?
The reasons for the breakup are not clear, but some analysts speculate that the partnership was not profitable for Goldman Sachs, which invested heavily in the Apple Card business and took on the credit risk of the customers. According to ZDNet, Goldman Sachs lost over $1 billion on the Apple Card since 2020 and had the worst loss rate among big US card issuers.Another possible factor is the tension between the two companies over various issues, such as the allegations of gender bias in the Apple Card credit limit algorithm, which sparked regulatory investigations and public backlash in 2019. Apple remained silent on the matter, while Goldman Sachs had to defend its credit decision process.
What will happen to the Apple Card users?
It is not clear what will happen to the existing Apple Card users if Goldman Sachs sells its portfolio to another bank. The terms and conditions of the Apple Card state that Goldman Sachs may assign or transfer the account or any of its rights or obligations under the agreement without the user’s consent. This means that the users may have to deal with a new bank and a new set of policies and fees.However, Apple may also decide to take over the lending and servicing of the Apple Card itself, as it has done with its new Pay Later service, which allows users to buy products and pay in installments with no interest or fees. Apple may also use its own lending and technologies for an upcoming iPhone hardware subscription program, which could replace the Apple Card financing option.
What are the alternatives to the Apple Card?
The Apple Card was launched in 2019 as a virtual credit card that offered a simple application process, no fees, daily cash rewards, and privacy and security features. It also integrated with the Wallet app on the iPhone, allowing users to manage their spending and payments easily.If the Apple Card is discontinued or changed significantly, users may look for other credit cards that offer similar benefits and features. Some possible alternatives are:
The American Express Cash Magnet Card, which offers unlimited 1.5% cash back on purchases, no annual fee, and a 0% introductory APR for 15 months on purchases.
The Citi Double Cash Card, which offers up to 2% cash back on purchases (1% when you buy and 1% when you pay), no annual fee, and a 0% introductory APR for 18 months on balance transfers.
The Chase Freedom Flex Card, which offers 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter, 5% cash back on travel purchased through Chase, 3% cash back on dining and drugstore purchases, and 1% cash back on everything else, no annual fee, and a $200 bonus after spending $500 in the first three months.
These cards may not have the same level of integration with the iPhone as the Apple Card, but they may offer more rewards, flexibility, and security for the users.