**The Prospects of Apple Card: A Synopsis of Goldman Sachs’ Obstacles and Possible Modifications**
Since its introduction more than six years ago, Apple Card has encountered considerable difficulties for its partner bank, Goldman Sachs. As reports indicate that Goldman Sachs is contemplating an exit from the collaboration, the future of Apple Card hangs in the balance. This article summarizes the current landscape surrounding Apple Card, the financial setbacks faced by Goldman Sachs, and the prospects for a new partner.
### Goldman Sachs Financial Setbacks
Goldman Sachs is reportedly aiming to divest its Apple Card partnership, with JPMorgan Chase positioned as the primary candidate for acquisition. Other potential players, including American Express, Capital One, and Synchrony, have been noted, yet their chances of assuming control seem minimal. American Express CEO Stephen Squeri has conveyed hesitation regarding the partnership, pointing out that the existing customer demographic includes a substantial proportion of subprime borrowers.
So far, the Apple Card partnership has set Goldman Sachs back by at least $1 billion, contributing to overall consumer product losses nearing $6 billion. These setbacks are attributed not only to credit delinquencies but also to the appealing features of the Apple Card, which include no foreign transaction fees, no late fees, up to 3% cash back on partner merchants, and 0% APR financing on Apple products.
### JPMorgan Chase Acquisition
At present, JPMorgan Chase is viewed as the “preferred option” for acquiring the Apple Card partnership. However, a formal agreement has yet to be finalized. One of the main obstacles for any prospective new lender is the elevated percentage of subprime customers linked to Apple Card. The subprime rate for Chase is approximately 15%, whereas Capital One’s stands at about 31%. In contrast, Apple Card’s subprime rate is 34%, indicating a significant risk for any financial entity contemplating the partnership.
Moreover, Apple Card’s delinquency rate is around 4%, surpassing the industry average of 3.05%. For a transaction to occur, a new lender would likely need to negotiate a “substantial discount” given the current liabilities of over $20 billion.
### Apple Card Savings Account
Another facet of the conversation is the Apple Card Savings Account, which is also backed by Goldman Sachs. Although it necessitates customers to possess an Apple Card, it lacks a strong affiliation with the card itself. Customers can choose to have their Apple Card cash back directed into the savings account, but aside from that, the two offerings are not significantly linked.
Currently, Goldman Sachs continues to provide its Marcus by Goldman Sachs savings account to consumers, despite a wider withdrawal from the consumer finance sector. It is conceivable that Goldman Sachs will retain the savings account even if the credit card partnership shifts to another financial institution.
### Conclusion
In conclusion, it seems highly probable that the Apple Card partnership with Goldman Sachs will come to an end by 2026, following years of discussions with various lenders. Although the precise outcomes for Apple Card remain uncertain, the substantial number of subprime customers and the considerable financial losses indicate that changes are on the horizon. Potential modifications could involve the implementation of late fees and a reduction in the card’s generous benefits.
Should JPMorgan Chase decide against the acquisition, Capital One could emerge as a formidable alternative, especially considering its recent acquisition of Discover, which positions it favorably as both a card issuer and payment network. The future of Apple Card will hinge on how these negotiations progress in the upcoming months.