Goldman Sachs (GS 0.48%) jumped headfirst into the credit card business when it partnered with Apple (AAPL -2.46%) to create the Apple Card, which has been referred to as the most successful credit card launch ever.
Now, the bank is doubling down, announcing a new partnership with General Motors (GM 0.81%) and Mastercard (MA -1.10%) to develop new and innovative credit card products. It was announced in October 2020 that Goldman had agreed to acquire GM's credit card business for $2.5 billion, but today's partnership indicates that Goldman has bigger plans than just to acquire the existing card accounts.
This could certainly help accelerate Goldman's push into consumer banking. The current GM credit card is issued by Capital One (COF -0.93%) and currently has more than 1 million cardholders who spend about $8.5 billion per year. For comparison, the Apple Card had a total of $3 billion in loan balances at the end of the third quarter of 2020, so this is a big increase to Goldman's credit card business.
Not only could the development of new rewards-based GM credit card products motivate cardholders to spend more, but this also provides Goldman Sachs with a ready-made base of more than 1 million customers it could cross-sell other financial products to, such as Marcus personal loans and high-yield savings accounts.
Goldman Sachs intends to start issuing GM-branded credit cards in September 2021. We'll have to wait and see what kind of impact the addition of GM's credit cards has on Goldman's consumer lending business. But this partnership could serve as a major growth catalyst for the business.