Big Changes Could Be on the Way for the Apple Card. Here's Why

Goldman Sachs has been the credit card issuer of the Apple Card from the beginning, but a change may be on the way. The investment firm wants to end its partnership with Apple, according to a recent report by The Wall Street Journal. There are also rumors that American Express is interested in taking over the partnership, although that hasn't been confirmed yet.

It's quite the pivot from earlier this year, when Goldman Sachs affirmed its commitment to working with Apple. And in October 2022, the two companies extended their partnership through 2029. Here's why Goldman Sachs seems to have soured on the arrangement, as well as what it means for current and potential cardholders.

Why Goldman Sachs wants out of the Apple Card business

The Apple Card has been a hit with consumers, as there were 6.7 million cardholders as of early 2022. The card and Goldman Sachs have also topped the J.D. Power Credit Card Satisfaction Study for the last two years.

Despite that success, it hasn't been a profitable venture for Goldman Sachs. Far from it -- it was reported in January of this year that Goldman Sachs has lost $1 billion on the Apple Card so far. It's probably a safe bet that if Goldman Sachs had made $1 billion from the Apple Card, it would be full speed ahead on the partnership.

Why has Goldman Sachs lost so much money, especially on what seems to be one of the more popular credit cards? While no one outside of Goldman can know for sure, there are a few likely reasons:

• The Apple Card doesn't charge any fees. There's no annual fee, late fees, foreign transaction fees, or over-the-limit fees.
• The Apple Card encourages cardholders to pay less interest. When you enter a payment amount, it estimates the interest you'll pay over time based on that amount.

These are great features for the cardholder, but not so much for the card issuer. Fees and credit card interest charges are a huge part of how credit card companies make money. A study on credit card rewards found that card issuers made $89.7 billion in credit card interest and $9.9 billion in card fees in 2019.

Apple deserves a lot of credit for making sure its card has these features. But they could be a big part of why Goldman Sachs wants out.

American Express could step in

The Wall Street Journal also reported that American Express is in talks with Goldman Sachs to take over the Apple partnership. This could include the Apple Card, the Apple Savings account launched in April exclusively for cardholders, and Apple's buy now, pay later service.

It's still early, and there's no guarantee it will happen. American Express, Apple, and Goldman Sachs would all need to come to an agreement.

The possibility of American Express and Apple teaming up is exciting for credit card enthusiasts. American Express cards are known for their high quality and excellent customer service. In a best-case scenario, the Apple Card could end up getting even better.

What's the future of the Apple Card?

Nothing is changing with the Apple Card right now, and it's still open for applications. It will likely stay that way unless Goldman Sachs and Apple agree to a transfer with another credit card company.

If a new card issuer takes over the Apple Card, there will probably be some changes. That's normally what happens when a credit card moves from one card issuer to another. On the bright side, Apple should continue to have a large say in the card's features. If you have an Apple Card, there's a good chance that the features you love won't be going anywhere.