4 ms·

Ah yeah that's fair; I was thinking more interest and penalties but I guess taking a percentage on all transactions almost certainly would work out to be more

william45123 2y ago
My understanding is that goldman sachs, who operates the apple card under the hood, is trying to get out of the deal because they lose money on it. I presume that the type of person who wants an apple card is strongly negatively correlated with the kind of person from whom they could make lots of money via fees from. I would bet my apple card balance that the percentage of apple card customers who religiously pay off their balance every month is much much higher than industry average.
- stefan_ 2y ago
  Not to interrupt the "Apple buyer are sophisticated high status individuals" talk but Goldman is losing money on the Apple card precisely because they are lending to people that can't make the payments.
  - TheNewsIsHere 2y ago
    There were reports (OTOH from late 2023 or early 2024) that GS not being a consumer-facing credit business created a lot of headaches and need for spending. GS did have some other cards before Apple Card, but they were not generally marketed or widely available to the masses like Apple Card. GS wasn’t well prepared for the extra overhead and customer support, and Apple negotiated a _lot_ of power that GS agreed to give them in areas like underwriting decisions. Apple wanted applications approved and many approvals wouldn’t have met with GS’s typical risk tolerance.
    - MBCook 2y ago
      Apple also reportedly wanted GS to approve everyone possible and be looser on their standards, which wouldn’t help keep away the worst customers.
lxgr 2y ago
These days, credit card issuers usually specialize on a specific segment of the population with each product. That's why the availability of each given card offer heavily depends on the prospective customer's credit score, disposable income (hence issuers asking for both yearly income and housing payments) etc. On top tier cards, interest and late fees are not the intended way to make money on the majority of cardholders (although of course banks will still charge them for customers that do carry a balance). On lower tier cards, you'll often see less rewards points or even annual fees without any corresponding benefits (i.e. no lounge access, no rental car insurance etc). For example, American Express has traditionally focused on higher-income cardholders, and their top tier cards are charge cards, which are always due in full at the end of each statement period (i.e. carrying a balance is not an option). They don't even list an APR, as far as I remember (although they've recently started offering an option to carry certain purchases, making that story a bit less clear).

william45123 2y ago

My understanding is that goldman sachs, who operates the apple card under the hood, is trying to get out of the deal because they lose money on it. I presume that the type of person who wants an apple card is strongly negatively correlated with the kind of person from whom they could make lots of money via fees from. I would bet my apple card balance that the percentage of apple card customers who religiously pay off their balance every month is much much higher than industry average.

stefan_ 2y ago
Not to interrupt the "Apple buyer are sophisticated high status individuals" talk but Goldman is losing money on the Apple card precisely because they are lending to people that can't make the payments.
- TheNewsIsHere 2y ago
  There were reports (OTOH from late 2023 or early 2024) that GS not being a consumer-facing credit business created a lot of headaches and need for spending. GS did have some other cards before Apple Card, but they were not generally marketed or widely available to the masses like Apple Card. GS wasn’t well prepared for the extra overhead and customer support, and Apple negotiated a _lot_ of power that GS agreed to give them in areas like underwriting decisions. Apple wanted applications approved and many approvals wouldn’t have met with GS’s typical risk tolerance.
  - MBCook 2y ago
    Apple also reportedly wanted GS to approve everyone possible and be looser on their standards, which wouldn’t help keep away the worst customers.

lxgr 2y ago

These days, credit card issuers usually specialize on a specific segment of the population with each product. That's why the availability of each given card offer heavily depends on the prospective customer's credit score, disposable income (hence issuers asking for both yearly income and housing payments) etc. On top tier cards, interest and late fees are not the intended way to make money on the majority of cardholders (although of course banks will still charge them for customers that do carry a balance). On lower tier cards, you'll often see less rewards points or even annual fees without any corresponding benefits (i.e. no lounge access, no rental car insurance etc). For example, American Express has traditionally focused on higher-income cardholders, and their top tier cards are charge cards, which are always due in full at the end of each statement period (i.e. carrying a balance is not an option). They don't even list an APR, as far as I remember (although they've recently started offering an option to carry certain purchases, making that story a bit less clear).