Please ensure Javascript is enabled for purposes of website accessibility

Goldman Sachs Is Planning to Build Its Credit Card Business in 2021

By Matthew Frankel, CFP® - Jan 15, 2021 at 2:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The bank just announced a new partnership with a major automaker.

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.

Customer handing credit card to smiling counter attendant.

Image source: Getty Images.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$308.20 (0.48%) $1.47
Apple Inc. Stock Quote
Apple Inc.
AAPL
$137.35 (-2.46%) $-3.47
General Motors Company Stock Quote
General Motors Company
GM
$36.12 (0.81%) $0.29
Mastercard Incorporated Stock Quote
Mastercard Incorporated
MA
$332.22 (-1.10%) $-3.68
Capital One Financial Corporation Stock Quote
Capital One Financial Corporation
COF
$113.33 (-0.93%) $-1.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.