Apple Card could be in for a big shake-up, and it’s all because of partner Goldman Sachs. The investment bank, which worked with Apple to introduce the tech giant’s credit card, is considering getting out of the consumer lending business, according to The Wall Street Journal. That could potentially leave millions of Apple Card customers hanging as Apple seeks a new financial backer.
Goldman is particularly eager to cut ties with Apple products, WSJ reported. Reports suggest that the bank spends $350 for every new Apple Card user. It also lost $1.2 billion in 2022 due to Apple Card.
The Apple Card represented the first foray for the tech giant, best known for iPhones and MacBook computers, into the world of personal finance. The card, which offered lucrative money-back features (if you used Apple Pay) and attractive savings account, has seen tremendous growth in users. Goldman Sachs said in 2019 that it was the most successful credit card launch ever.
Goldman Sachs’ tone has reportedly changed for the worse.
In April, Apple began offering customers a high-yield savings account backed by Goldman Sachs, and in just four days, users deposited almost $1 billion. At launch, the savings accounts offer a 4.15% yield – over ten times the national average at the time. After the joint venture was off the ground, a Goldman partner reportedly told colleagues, “We should have never done this f–ing thing.” (censorship is the Journal’s)
The bank even put caps on the amount of deposits it would accept for the Apple account, according to the report, but surpassed the figure in just a few weeks. Goldman increased the cap, but deposits keep climbing.
Those accounts are a big reason why Goldman Sachs can’t break up with Apple. If Apple takes its partnership to another bank, Goldman could be forced to find a massive amount of funding fast. That’s because those deposits have likely been invested already, meaning Goldman would need to cover those accounts if they moved away. According to the report, the risk of this situation is one of the reasons few card issuers offer savings accounts with their card partners.
Bank employees are exploring options, but none are certain at this time. With Goldman’s profits expected to be down, investors will be looking for some guidance from CEO David Soloman.
Goldman Sachs and Apple weren’t immediately available for comment.