Apple won‘t save you if you default on your Apple Card
Apple is the face of the Apple Card, but Goldman Sachs really controls it.
Don’t expect Apple to go easy on you if you get delinquent on payments to your Apple Card. Because that is not in Apple’s control.
The credit card is underwritten by Goldman Sachs. And the bank made it clear this week that it alone makes the decisions about collections from delinquent cardholders.
Apple Card is still a credit card
The tag line for the Apple Card sounds innovative: “A new kind of credit card. Created by Apple, not a bank.” That phrase caused an analyst to ask Goldman Sachs executives on a conference call if the iPhone-maker would “hamstring” the bank’s efforts to collect from delinquent accounts.
The analyst proposed a hypothetical situation. Suppose unemployment rises, which inevitably drives up credit card delinquencies. Is Apple willing to accept any negative press coverage that might come from collecting unpaid debts from people who’ve lost their jobs?
The bank made it clear that it fully controls the relationship with Apple Card holders. Goldman Sachs’ Chief Financial Officer Stephen Scherr said, “I want to be really clear on this, notwithstanding whoever lays claim to the creation of the card: There’s only one institution that’s making underwriting decisions, and that’s Goldman Sachs.”
Scherr went on to say, “Apple is completely in the know as to how we are going about these underwriting decisions. But the ultimate decision sits with us, and so we calibrate, manage our risk and collections in the context of that.”
Apple Card already created bad PR for Apple
The Apple Card already caused a public relations problem for Apple. This fall, Cupertino faced accusations that the algorithm used to decide credit limits for the card favored men. Some declared Apple Card sexist.
While Goldman Sachs developed and owned the algorithm in question, Apple took the brunt of the criticism.
Source: Seeking Alpha