The Apple Card and Goldman Sachs are enjoying and suffering in equal measures if two reports are to be believed. The popular credit card and its issuer, Marcus by Goldman Sachs, have been named Best Midsize Credit Card Issuer by JD Power & Associates for the second year in a row. At the same time, another report states that the Apple Card’s consumer credit profile is deeply subprime.
Apple Card & Goldman Sachs Top JD Power Credit Card Satisfaction Survey
The Apple Card and issuer Goldman Sachs again topped the charts in the Midsize Credit Card Issuer segment of the annual JD Power US Credit Card Satisfaction Study for the second consecutive year. Apple Card and Goldman Sachs also ranked highest across all of the surveyed categories in the Midsize Credit Card Issuer segment for the second year in a row, including interaction, credit card terms, communication, benefits and services, rewards, and key moments.
“Enhancing our customers’ lives is at the heart of what we do, so we are honored to have Apple Card and issuer Goldman Sachs recognized again this year for customer satisfaction,” said Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet. “We remain committed to providing a digital-first credit card that helps customers lead healthier financial lives, and we look forward to continuing to deliver innovative financial tools and award-winning customer satisfaction to our Apple Card users.”
A Growing, Subprime Problem?
Despite the positive news from JD Power, not all is well for the Apple Card or Marcus by Goldman Sachs. According to a September 6 note from JPMorgan, many Apple cardholders’ credit profiles resemble those seen with subprime lenders like Credit One. More than 25% of the company’s credit card loans are for customers with FICO scores below 660, placing them in the subprime lending category.
Even more worrying for Goldman Sachs is that its loss rate on credit card loans is the worst among major US credit card issuers and “well above subprime lenders” at 2.93%, according to the same September 6 note. “People are losing their jobs, and you had inflation at 40-year highs; that will impact the subprime cohort more because they are living paycheck to paycheck,” said Michael Taiano, a senior director at Fitch Ratings. “With Goldman, the question will be, were they growing too fast into a late-cycle period?”
The consumer banking operations at Goldman Sachs have irritated some investors, as the division has been a money-loser since launching in 2016. The current Marcus by Goldman Sachs credit card portfolio includes the Apple Card and three GM Rewards credit cards: the My GM Rewards Card™, GM Extended Family Card, and the GM Business Card™.
The startling news will pose problems for under-fire Goldman’s CEO David Solomon. Solomon will likely face questions from company directors at the upcoming voard meeting this week.
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