It's fascinating how major financial institutions like Goldman Sachs operate, especially when they partner with tech giants like Apple. The Apple Card, while appearing simple and consumer-friendly, has a sophisticated business model behind it, designed to generate revenue for both Apple and its banking partner, Goldman Sachs. Let's delve deep into how Goldman Sachs makes money from the Apple Card, with a step-by-step breakdown.
Unpacking the Apple Card: Goldman Sachs' Revenue Engine
The Apple Card, launched in 2019, positioned itself as a revolutionary credit card with no fees, daily cash back, and strong privacy features. While Apple handles the user experience and marketing, Goldman Sachs Bank USA is the issuing bank, which means they're the financial backbone of the entire operation. This partnership, while initially a significant foray into consumer banking for Goldman, has evolved, with recent reports indicating Goldman's desire to exit some of its consumer lending businesses, including potentially the Apple Card partnership. However, for the period they have been and continue to be involved, their revenue generation has been multifaceted.
Step 1: Engaging Your Curiosity: Ever Wondered How "No Fees" Still Means Profit?
It's a common marketing hook: "No annual fees, no late fees, no foreign transaction fees!" Sounds amazing for the consumer, right? But if there are no direct fees, how does a sophisticated financial institution like Goldman Sachs, known for its profit-driven strategies, actually make money? This is where the intricacies of the credit card business model come into play, and it's far more nuanced than a simple fee structure.
Step 2: The Core Revenue Stream: Interest on Outstanding Balances
This is, by far, the most significant way Goldman Sachs generates revenue from the Apple Card.
Sub-heading: The Power of Revolving Credit
The vast majority of credit card users do not pay their balance in full every month. When a cardholder carries a balance from one billing cycle to the next, Goldman Sachs charges interest on that outstanding amount.
Variable APRs: Apple Card, like most credit cards, has variable Annual Percentage Rates (APRs). These rates can range, for example, from 18.24% to 28.49% (as of January 2025, per Apple's disclosures), depending on the cardholder's creditworthiness. This wide range allows Goldman Sachs to price risk – customers with lower credit scores are charged higher interest rates to compensate for the perceived higher risk of default.
Encouraging Smart Payments (But Still Profiting): While Apple Card's interface is designed to help users understand how much interest they'll pay based on their payment amount (a feature that encourages paying more than the minimum), the reality is that many users will still carry a balance, leading to consistent interest income for Goldman Sachs. Even a small percentage of millions of cardholders carrying balances translates into substantial revenue.
Step 3: Merchant Interchange Fees (The "Swipe Fee" You Don't See)
This is a less obvious but equally crucial revenue stream, shared between the issuing bank (Goldman Sachs), the payment network (Mastercard for Apple Card), and sometimes the co-brand partner (Apple).
Sub-heading: The Invisible Cost of Convenience
Every time you use your Apple Card (or any credit card) at a store, online, or in an app, the merchant pays a small percentage of that transaction as a fee. This is known as an interchange fee (or merchant discount rate).
Who Pays What: When you swipe your card, the merchant's bank (the "acquiring bank") collects this fee. A significant portion of this fee is then passed on to the issuing bank (Goldman Sachs in this case) and the payment network (Mastercard).
Apple's Cut: While not a direct merchant fee to Apple, Apple reportedly receives a small percentage (around 0.15% in the U.S.) of these interchange fees when Apple Pay is used. This incentivizes Apple to promote Apple Pay usage.
Volume is Key: Goldman Sachs benefits from the sheer volume of transactions processed through the Apple Card. The more people use their Apple Card for everyday purchases, the more interchange fees flow back to Goldman Sachs. Apple's large user base and seamless integration of the card within its ecosystem drive this volume.
Step 4: The Apple Card Savings Account: A Low-Cost Funding Source
Introduced in April 2023, the Apple Card Savings account, provided by Goldman Sachs Bank USA, adds another layer to their revenue model.
Sub-heading: Leveraging Deposits for Lending
Attracting Deposits: The Savings account offers a competitive Annual Percentage Yield (APY) to Apple Card users for their Daily Cash back and other deposits. As of May 2025, this APY was around 3.65%. This high-yield offering encourages users to deposit their money with Goldman Sachs.
The "Spread" in Banking: Like any bank, Goldman Sachs takes these deposits and uses them for lending activities, including extending credit through the Apple Card itself, as well as other loans and investments. The key is the interest rate spread: Goldman Sachs pays a certain interest rate to depositors (e.g., 3.65% APY on Savings) and earns a higher interest rate on the money it lends out (e.g., the 18-28% APR on Apple Card balances). The difference between these rates is a significant source of profit.
Low-Cost Capital: Attracting consumer deposits through the Apple Card Savings account provides Goldman Sachs with a relatively low-cost source of capital compared to other funding methods.
Step 5: Strategic Play: Building a Consumer Banking Presence (and its Challenges)
While not a direct "money-making" mechanism in the same way as interest or fees, the Apple Card was a strategic move for Goldman Sachs.
Sub-heading: Beyond Investment Banking
Diversification: Traditionally known for its investment banking and institutional client services, Goldman Sachs aimed to diversify its revenue streams by expanding into consumer banking through its Marcus by Goldman Sachs platform. The Apple Card was a flagship product in this endeavor, providing instant access to millions of Apple's loyal customers.
Data and Analytics (with Privacy in Mind): While Apple emphasizes privacy (and Goldman Sachs has stated they won't sell user data for marketing), the partnership undoubtedly provides Goldman Sachs with valuable insights into consumer spending habits and credit risk, which can inform their broader consumer lending strategies.
Brand Building: Associating with the Apple brand undoubtedly helped Goldman Sachs gain a foothold and build credibility in the consumer finance space.
Step 6: The "No Fees" Nuance: Where Goldman Sachs Doesn't Make Money (or appears not to)
It's important to reiterate that while the Apple Card boasts "no fees," this primarily refers to fees charged directly to the consumer.
Sub-heading: A Consumer-Friendly Facade
No Annual Fees: This is a direct benefit to the consumer and means Goldman Sachs doesn't collect a recurring charge simply for having the card.
No Late Fees: Unlike many traditional credit cards, the Apple Card does not charge a penalty for late payments. However, interest will continue to accrue on the outstanding balance, which still benefits Goldman Sachs.
No Foreign Transaction Fees: This encourages international use, which in turn generates more interchange fees for Goldman Sachs.
These "no fee" policies are a key differentiator that attracts consumers to the Apple Card, ultimately leading to more potential interest-bearing balances and interchange fee generation for Goldman Sachs. It's a strategic trade-off.
In Summary: A Multi-Pronged Approach
Goldman Sachs primarily makes money on the Apple Card through:
Interest charged on outstanding balances carried by cardholders.
Interchange fees collected from merchants on every transaction, a portion of which goes to Goldman Sachs as the issuing bank.
The interest rate spread from the Apple Card Savings account, leveraging consumer deposits as a lower-cost funding source for their lending activities.
While the consumer-friendly "no fees" aspect is a powerful marketing tool, the underlying mechanics of credit card finance ensure that Goldman Sachs, as the financial institution behind the card, has multiple avenues for profitability. The venture into consumer banking with Apple has been a learning experience for Goldman, and its future involvement remains a topic of discussion in the financial world.
10 Related FAQ Questions
How to: Apply for an Apple Card?
You can apply for an Apple Card directly within the Wallet app on your iPhone. The application process is quick, and you can often see if you're approved in minutes without impacting your credit score initially.
How to: Avoid paying interest on your Apple Card?
To avoid paying interest, you must pay your entire outstanding balance in full by the due date each month. The Apple Card app provides clear visuals to help you understand the interest implications of different payment amounts.
How to: Earn Daily Cash with Apple Card?
You earn Daily Cash automatically on eligible purchases: 3% on Apple purchases and at select merchants using Apple Pay, 2% on all other Apple Pay purchases, and 1% on purchases made with the physical titanium Apple Card.
How to: Use the Apple Card Savings account?
If you have an Apple Card, you can open a high-yield Savings account directly within the Wallet app. You can automatically deposit your Daily Cash into this account, or transfer funds from a linked bank account.
How to: See your Apple Card balance and transactions?
All your Apple Card details, including your balance, transactions, and payment history, are accessible and easily managed within the Wallet app on your iPhone. Transactions are color-coded for spending categories.
How to: Understand the difference between Apple Card and Apple Pay?
Apple Pay is a payment service that allows you to make secure contactless payments using your iPhone, Apple Watch, iPad, or Mac with various credit and debit cards. The Apple Card is a specific credit card issued by Goldman Sachs, which is deeply integrated with Apple Pay and the Apple ecosystem.
How to: Find your Apple Card number?
Your physical Apple Card does not have a card number printed on it for security. You can find your virtual card number for online purchases within the Wallet app on your iPhone.
How to: Dispute a transaction on Apple Card?
You can dispute a transaction directly through the Wallet app on your iPhone by selecting the transaction and using the "Report an Issue" feature.
How to: Get a physical Apple Card?
Upon approval for the Apple Card, you can request a physical titanium card from the Wallet app if you wish to make purchases at locations that do not accept Apple Pay.
How to: Benefit from Apple Card's interest estimation feature?
The Apple Card in the Wallet app shows you an estimate of how much interest you'll pay based on different payment amounts. This real-time estimation helps you make informed decisions to potentially reduce interest charges.
