Tech stories can range from the sublime to the absurd. This one will likely be filed under the latter category. On Monday, it was reported that Goldman Sachs' loss rate on credit card loans has soared to 2.93 percent in Q2 2022, which is the worst among major U.S. card issuers. One might be asking, "What does that have to do with tech?" The answer to that lies in the reason behind Goldman Sachs' troubles and it's because of one of the company's bigger recent endeavors: the Apple Card.
According to a CNBC report, Goldman Sachs has attracted a large customer base mainly because of the Apple Card and its lax approval requirements. There are over 14 million Apple Card users that have racked up $16 billion in debt, a figure that the report states is expected to hit $30 billion before 2024. Since Apple Cards seem to be going to just about anybody, the number of delinquent payments has risen substantially, leading to the aforementioned 2.93 percent loss rate.
The Apple Card was a major highlight of the March 2019 Apple Special Event. CEO Tim Cook cited the card as a way to take advantage of Apple's massive install base to push into the credit card world. Cook stated that the card would feature no late fees, international fees, overage fees, or annual fees. Combine that with one of the lowest interest rates on the market and one begins to see why Goldman Sachs might be having a problem. It should be noted, however, that in spite of these troubles, the Apple Card from Goldman Sachs has topped the J.D. Power U.S. Credit Card Satisfaction Study survey for the second year in a row, so while the investment bank is taking a big financial hit, the Apple Card remains squarely on people's radars.
While Goldman Sachs had no trouble getting the Apple Card into consumers' hands, the poor repayment rate, despite a low national unemployment rate, has led to a rough patch for the financial company. As of now, the Apple Card is in the red and predictions that Goldman Sachs would not reach profitability are starting to come to pass. The moral of the story is: reinventing the credit card is harder than it looks. We'll continue to watch these and other tech stories here at Shacknews, so keep it here for any updates.