Can I add my capital one card to apple pay before it arrives

 

Can I add my capital one card to apple pay before it arrives

So goldman sachs which is the current issuing bank behind the apple card has made it clear that the apple card has been a money losing proposition and a huge money losing proposition they haven't singled out exactly all of the losses that are due to the apple card versus some of the other operations 

But it looks like maybe around 1 billion dollars lost over the last year for the apple card maybe as much as 3 billion since 2020 and goldman even has sort of messed up the apple card so bad that they've got the federal reserve probing into their consumer card business to see 

How it could have gone so wrong goldman sachs has announced that they are restructuring their business and perhaps the biggest casualty of that is the retail lending business what we might think of as the marcus division of goldman 

So it looks like that's going to be split up some of it is going to go away entirely or maybe some of the products are only going to be offered to high net worth individuals and then the co-brand credit card and some other loan products that they have going to get their own division so that's apple card 

You've also got the gm card and some other stuff within that now goldman did extend their contract last year with apple for the apple card all the way through 2029 and they were talking about launching a new high yield savings account but with this news over the last 10 days it sure looks like what goldman is trying to do is get themselves out from under apple 

If they can I think they will and apple card will end up in the loving arms of capital one now you might be thinking adam why would capital one take on the apple card when they can see that it is losing a billion dollars a year and then you might also be thinking adam why would apple let goldman sachs out of a contract that they had just extended for the apple card 

So let's take that second in question first my guess is that when goldman sachs and apple put together their contract there is some sort of escape clause that allows goldman sachs to get out if they pay apple a certain amount of money so some big lump sum well when you have a business that is losing a billion dollars a year even 

If you have to pay 500 million to get out of the contract that is something that you would be willing to do if you're good at math and then back to the question of why anyone would take on such a money losing business well just because the apple card is a huge money loser for goldman sachs does not necessarily mean that it would be a huge money loser for every other card issuer out there 

If we think back to when apple decided to launch the apple card and they were looking for a new partner it just so happened to coincide with the fact that goldman sachs wanted to get into consumer lending in a big way so I think we can make the assumption based on what we have seen that goldman 

Pretty much gave apple anything they wanted in order to win that business make a big splash and become a player in consumer lending and it looks like one of those big concessions was that apple pretty much said we want you to prove almost everyone especially 

If they are someone that is buying an apple phone or a computer and financing it so a lot of too many people surprise a lot of the people that actually got apple cards didn't have very good credit scores and they themselves were even surprised that they could get the apple card 

So this is not necessarily the way that other banks would do business but it is a way that goldman sachs was willing to do business because they wanted that business so bad but if goldman does have an escape clause and they do get out of the apple card and apple has to go looking for a new partner they don't have the same leverage that 

They did the first time around number one because they don't have as desperate of a potential partner as goldman was and number two the numbers are out there for people to see how bad the business was under those current conditions 

So if apple's looking for a new partner they're not going to find a partner that is going to give as many concessions as goldman sachs was willing to so what you have is apple looking to find a partner that is going to approve a lot of the people that go after the apple card 

But they're also going to need a partner that feels like they can at least make some money on those type of subprime or near prime customers and the most likely candidate capital one not only does capital one know how to profitably work with consumers that maybe have a little shaky credit 

They also have plenty of experience working with large retailers and running their credit card operations walmart being the easy example but also coals cabela's and many others and then again on apple's side they would have to be willing to make more concessions to allow capital one to say no to more potential card holders than 

They were allowing goldman sachs to say no to the only other banking partner that would really make sense for apple would be synchrony bank they have the experience working with large retailers they have dealt with people with lower credit scores but synchrony bank had the walmart business lost it to capital one and part of the reason 

They lost it was because walmart at least in part was unhappy with the number of people that were getting approved for the walmart credit card and obviously felt like they could get a better deal with capital one so synchrony bank even if they were maybe feeling 

A little desperate after losing walmart could probably look at what just happened to goldman sachs and say that's going to be us next but when you look at other candidates all of them seem unlikely you could look at comenity that has plenty of experience with retail store cards but probably 

A little too small for apple's liking a lot of the big banks would not touch apple after seeing what happened with goldman sachs chase definitely not going to go down that road uh city already has the monster of costco on its books maybe that's a break even operation but city gave up an awful lot just to get that costco business 

I don't think they're going to take on apple on top of that unless they knew they were actually going to make money from that city took that business away from american express because american express would not give costco everything they wanted which tells you that american express probably not going to give apple everything that they want either bank of america wells fargo u.S bank 

They all get into some retail store cards but probably none of them are going to be risky enough to take on apple especially again after seeing what has happened with goldman sachs so my prediction capital one by 2024 

At some point will become the issuing bank for the apple card would love to hear your thoughts on my prediction put those in the comments section below otherwise I thank you for watching and as always please go to proudmoney.Com where we do credit card reviews we talk personal finance we talk deals and all sorts of other fun stuff too.

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