- Apple Card, Apple’s new credit card, applications are now available for iPhone users.
- The bank behind the card, Goldman Sachs, approved users of the card who have “subprime” credit ratings under Apple’s leadership, CNBC reported.
- Sources told CNBC that Apple has asked Goldman Sachs to ensure that as many iPhone users as possible are approved for the Apple card.
- However, the report also indicated that Goldman Sachs would give credit limits in line with users’ credit histories.
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Some people with less than stellar credit scores are approved for Apple’s new credit card launched this week, CNBC reported.
The bank behind the Apple card, Goldman Sachs, is said to have approved applicants with “subprime” credit scores – a term with varying definition but often defined as any score around 670. This is coming to Apple’s management, according to the report, because they want to ensure that as many iPhone users as possible are approved for the Apple card.
Apple launched its new credit card on the assumption that it would be incredibly popular among consumers, with its low interest and free of charge. However, approving credit cards for people with low credit scores comes with risks, as a lower credit score tells financial institutions that you are a high risk borrower.
The financial crisis of the last decade has been widely attributed to financial institutions that have approved loans for borrowers with subprime credit scores and have defaulted on their payments.
But CNBC reported that although people with risky credit scores will be approved for the Apple card, Goldman Sachs will not provide users with more credit than their credit score profiles suggest they can handle. It is to highlight that Goldman Sachs has a long history of lending to subprime borrowers and said the practice helps predict future business cycles.
IPhone users can now request the all white, minimalist design Apple card. The card has a number of user-friendly features that make it incredibly easy to activate and use. Apple card also comes with no annual fees, late payment fees, or charges for international use, and interest charges are “among the lowest in the industry,” says Apple.
However, efforts to eliminate fees have resulted in some financial analysts are worried the Apple Card business model, since credit card fees and interest amounted to approximately $ 178 billion total in the United States in 2018.
But Goldman Sachs Executives Told Business Insider US the Apple Card will help build long-term customer loyalty, which is more beneficial than immediate income.
Neither Apple nor Goldman Sachs were available for comment at the time of publication.