Citigroup Reportedly Passed on Apple Card Due to Profitability Concerns

[npmacuser5]

The rewards on this card are mediocre at best. As noted, they should've done 2% across the board on all transactions. But I may be interested in this for card for security purposes. Since there is no physical number I am interested if it generates a new number for every online purchase that can't accept Apple pay. If so I may get it.

Has a mag stripe on the back. Rather easy to read with a cheap device. The Apple Card generates a unique I’d number for each transaction that is tied to your iPhone key for the card. Very good online security.

 

[ActionableMango]

Clearly those people were wrong. Fake news everywhere these days.

Yes, clearly.

Apple has stated that the interest rate will range from 13.24% to 24.24%, depending on your credit score.

If you needed 800 just to barely qualify for the card, then you'd be at the worst rate of 24.24%. Apple wouldn't have a huge interest rate spread of 13.24% to 24.24% for a credit score spread of 800 to 850 (max). 800 to 850 is for all practical purposes is identical and certainly wouldn't justify an 11% spread for risk, because there is essentially little to no difference in risk.

So 800 minimum to get the card makes no sense. Excellent credit is probably required to get the best rate offered, but not to get the card in general.
[doublepost=1559081704][/doublepost]

Sorry to break it to you but it IS just a credit card with a fancier material

There are two substantial financial differences from other credit cards that are almost certainly why Citi found it to be insufficiently profitable. (1) No fees, and (2) no penalty interest rates. That is a huge difference for the presumably millions of people who currently pay those things.

Even for careful people like me who don't pay those things, there are nice features in the UI and I'm definitely switching for those.

Also, a one-time-use token instead of a credit card number means it won't get stolen remotely and I won't have the hassle of getting a new card/account number like I've had to do half a dozen times, the latest of which was just a couple of months ago.

 

[raghu8912]

Goldman Sachs seeks to disrupt consumer finance by putting the customer first.

Like how Goldman put their Credit Default Swap customers first, when they stopped answering the phone when it came time for them to pay their customers' swaps, and even refusing to recognize the market price of those swaps that moved against them? Goldman only puts their customers first when it's profitable for them to do so. In other words, never.

Customers means Shareholders
[doublepost=1559083768][/doublepost]

I still find it utterly bizarre that Apple is launching a credit card.

Like, I know they had one of those branded cards before that lots of stores have, but this is another level. It feels like Apple is trying to monetise me, as a customer.

Apple said in the launch event that no one including Master, Goldman and Apple will have access to the transactions.

 

[cfurlin]

So your whole comment is based on what you read in a forum here regarding something no one can really know? I have a bridge for you

Not to mention the fact he thinks credit cards are for financial assistance.

 

[ActionableMango]

It’s a card just like any other. Don’t pay your balance on time? They’ll charge you interest just like any other card. Anywhere from 13.24 to 24.24%.

With every normal card if you don't make a payment, they nail you. You'll have a late fee every single month you don't make a payment. Keep that up for a few months and you'll have a ding on your credit report and it switches to a punitive high interest rate. It's a trap that makes it just that much harder for people to pay off.

With Apple Card there are no late fees and no penalty interest rates. Any debt held past the no-interest grace period just accrues interest based off of the normal rate and with no fees, whether you are making payments or not.

For every single person that's ever paid a late fee or punitive interest rates, and had their credit report crapped on, that's a substantial difference.

 

[AFDoc]

I already have two credit cards and don't really desire a third, but I'd be lying if I said I wasn't considering this. It looks cool, has good terms and if I end up not using it, no harm at all.

I do wish they paid at least 1.5% cash back on physical card (non-Apple Pay) transactions, though. Chase gives me 1.5% cash back on everything, and Apple Pay acceptance is very hit or miss around here. Particularly restaurants tend to not take Apple Pay.

If you don't use the cards it doesn't matter how much they give you back....

 

[mtbgtr]

The Apple Card is made of titanium, not plastic.

And you can use it as a weapon!

 

[dontwalkhand]

While I agree with you here---I don't think any major bank in the US is clean when it comes to how they behaved prior and after the Housing Market burst.
[doublepost=1559077623][/doublepost]
why they hell would someone not take MasterCard if they take VISA? (boggled)

Costco has always only taken one card brand, before it was American Express, now it is Visa only. They do accept all types of debit cards however, for those without access to a Visa card, such as MasterCard debit cards, those will still work. But since the Apple Card is a MasterCard credit card, it would decline whether you would use Apple Pay or physical card.

 

[aka777]

Encouraging news for consumers

Nice. Cannot stand that company (citi) and their outsourcing of support and ops to a third world economy, with almost no oversight.

 

[martyjmclean]

This is just not true at all: I’ve been traveling in Central Europe for 9 days, spanning 6 cities and 4 countries (Austria, Hungary, Slovakia and Czech Republic). All vendors, from restaurants, bars, souvenir shops and train tickets, except one fancy cocktail bar take credit cards, and pretty much by default, Apple Pay. That’s not even counting london, where I hardly ever take our wallet anymore (everything is paid with iPhone).
It actually makes US a look backwater.

Credit cards are not debit cards. Having worked in the UK and holidayed in Europe, I can assure you most people don't use credit cards.

 

[upnorth85]

I have a fidelity rewards card that pays 2% cash back on everything with no limit. In any case Goldman has the morals of an alley cat. No way I will keep watching my back doing business with a company that bets against its own customers. I suppose doing “God’s own work” as their CEO put it..
[doublepost=1559107089][/doublepost]

Sure they do. I use ApplePay every time I go there. They had issues when they rolled it out, but that has long since been resolved.

Since I have to show the membership card at checkout anyway, I just tap it on the payment device before putting the Citi Costco card back in my wallet. I have thus not used Apple Pay at Costco.

 

[Alan Wynn]

I read the T&C's of the Apple Card.
This is how it measures for my financial use case:

1. 3% on purchases on Apple, brick-and-mortar or website. [My 100% Con: Apple charges state taxes (6% on my region) so my incentive is to tailor significant Apple product purchase from B&H (no tax, no shipping charge).]

You might want to check B&H again, as they now charge tax on all purchases, unless you have their credit card.

2% on purchases with Apple Pay (website or brick-and-mortar). [My Partial Con: Never tend to use Apple Pay, because my Costco Exec-level City card (4%,3%,2%,1%) remains as my go-to card, and Costco will not accept AppleCard (MasterCard not accepted).]

Do not understand your logic here. You get 4% on gas, 3% on dining, 2% on CostCo and 1% everywhere else. Not sure why you do not have your CostCo card in Apple Pay, as it works in great in CostCo. For gas, (properly coded) travel/dining and CostCo purchases, you would do better with the CostCo card. For other purchases for which you can use the AppleCard via ApplePay, you would get a full 1% more.

1% else, everywhere. [See item 2 above.]

The Apple Card is exactly the same as the CostCo card, but overall a bit more secure (no one can see the number on the card, nor the CID, which gives it a bit more security.

[I also use the Target RED card, where I always get 5% off and free shipping on Target purchases, with no fees. This covers 5%/6%=83% of my sales tax.]

That you use the Target RED card shows that you are happy to have special cards for special purchases. Having at Apple Card if only for Apple Pay transactions that are not gas or dining/travel would make sense for you.

 

[fairuz]

Lol I love the AMEX drones that have to find something to whine about with Apple Card.
Sorry. AMEX isn't the best thing on the block anymore.

Was it ever? Nobody takes it cause it charges ripoff fees. I hope it dies.
[doublepost=1559110009][/doublepost]

Yeah, except that most people who actually need financial control and assistance aren't going to be able to get this card. Weren't people on the forums saying you need a credit score of 800 or higher? Seems to be another case of the rich keep getting richer. Not that people that have over 800 are rich, but you'd be very hard pressed to find any poor person with a score over 800. Mine is over 800 and I am not rich but comfortable, but a card like this when I was younger would have been useful.

I think ironically rich people don't have the highest credit scores cause they don't borrow enough. Though the richest may borrow a lot for big positions where this makes sense.

 

[brgjoe]

This is one of those times where I think I shall wait for the early adopters to try this out.

Kinda like when a new piece of tech gets released, I wait and see how well it works out there in the real world. Same with this credit card. I will see how the early reviews go before I decide to get one.

 

[G5isAlive]

I remember hearing reports from multiple people saying they were declined with scores in the mid to upper 700s. Haven't followed up since. Feel free to provide evidence instead of criticizing my comment.

Let’s start with... the Apple card is not available yet to the general public so it’s impossible you heard anything of the sort. Then let’s go with ‘I heard’ is no evidence at all. I heard people with credit scores of 620 were getting approved. Of course i made that up, but hey, it’s just as valid.

So giving you the benefit of the doubt, what you may be confusing the current apple card with is past apple credit discussions. Two different systems, two different banks. Totally unrelated. So your comment that you need a FICO score of 800 for Apple Card is not factual.

https://forums.macrumors.com/thread...did-i-get-denied-for-apple-financing.1921116/

 

[ericinboston]

...Seems to be another case of the rich keep getting richer. Not that people that have over 800 are rich, but you'd be very hard pressed to find any poor person with a score over 800. Mine is over 800 and I am not rich but comfortable, but a card like this when I was younger would have been useful.

First, people who are already rich don't get RICHER by using their credit card. They are spending money so technically they have less money after all the purchases. Yes, as with ALMOST ALL credit cards, there are PERKS beyond delaying your payment. But people don't get rich off credit cards.

Second, a credit score does not define or indicate how rich you are. My 77 year retired old mom who lives on $21,000 a year income (Social Security and her small nest egg) has a credit score of 749 which is considered "very good". She was actually over 800 for the past few years but when she went into the hospital last Fall and failed to pay ALL her bills for 2 months, she got rightfully dinged on her credit score and it was lowered to 650 ("fair"). It has been slowly climbing up every 3 months. Credit scores are determined by 1)how much total revolving debt you have, 2)how much possible credit card debt you can rack up (such as having a $15,000 credit limit on 1 card and a $10,000 credit limit on a 2nd card), 3)your payment history (late vs. on time), 4)length of having credit, and other NON-INCOME factors.

In a very broad statement, you could propose that poor people (define poor please) may have lower credit scores and that proposal could be somewhat accurate. But the REASON is not because they are poor...it's because of other factors. Heck, there is a fair percentage of the USA society that does NOT have credit simply because they pay with cash and do not own any kind of bank account. Trust me, the banks, credit card agencies, and government would love to get them somewhat off cash. The banks and credit card agencies would earn money while the government would be able to track their money flow and tax them appropriately.

 

[LordVic]

Apple is aiming to shake up the credit card industry by collecting no fees whatsoever, offering one to three percent cash back paid out on a daily basis, and providing consumers with interactive features such as color-coded spending summaries in the Wallet app to assist with spending and budgeting.

I think the Apple credit card is a good toe dip into the financial industry, which would be a great use of Apple's cash to get into.

But at the same time, This quote is... sort of laughable and attempting to paint Apple and Apple's credit card as some sort of innovator and leader in the space of CC's


EVERY credit card provider has similar functions and features. Apple's card, aside from it's integration into Apple Pay and iOS doesn't offer any financial features above and beyond anyone else already.

There are dozens of cards that do 1-3% rewards, either cash, points or other assorted returns. Many of these are no fee cards. And many have apps that do similar budgeting and colour coding features.

heck, the card I've been using for 10+ years has all of those features. Zero fee. 1% return on most purchases, up to 5% on gas and groceries.

There's nothing wrong with Apple's offering an I think it's a great expansion on services. I just get annoyed by the sugar coating and attempt to "sell" Apple's provisions as something more than they are.

However, on Credit Cards. People. Be safe and smart with them. They're not meant for long term loans or sitting in debt. if you're unable to pay the majority, if not all your CC every month, I wholly recommend going and talking with a financial planner and getting your debt under control before expanding and getting an Apple card or any other CC.

 

[rjohnstone]

With every normal card if you don't make a payment, they nail you. You'll have a late fee every single month you don't make a payment. Keep that up for a few months and you'll have a ding on your credit report and it switches to a punitive high interest rate. It's a trap that makes it just that much harder for people to pay off.

With Apple Card there are no late fees and no penalty interest rates. Any debt held past the no-interest grace period just accrues interest based off of the normal rate and with no fees, whether you are making payments or not.

For every single person that's ever paid a late fee or punitive interest rates, and had their credit report crapped on, that's a substantial difference.

I can guarantee that Apple (Goldman) will ding your credit report with a 30/60/90 delinquency. No penalty fee does not mean no derogatory remarks on your credit report.
[doublepost=1559146431][/doublepost]

Was it ever? Nobody takes it cause it charges ripoff fees. I hope it dies.

Amex is still a premier card... always has been. They target a wealthier clientele and make most of their money from annual fees.
Amex transaction fees (2.5% - 3%) are slightly higher to Visa/MC (1.5% - 2.5%).
Amex owns its own network, whereas Visa/MC run through many different networks to process a transactions, so their overhead is lower.

As for them dying, not a chance. Don't like them, don't use them. It's pretty simple.
The fact that Discover is still around in amazing.

 

[macduke]

First, people who are already rich don't get RICHER by using their credit card. They are spending money so technically they have less money after all the purchases. Yes, as with ALMOST ALL credit cards, there are PERKS beyond delaying your payment. But people don't get rich off credit cards.

Second, a credit score does not define or indicate how rich you are. My 77 year retired old mom who lives on $21,000 a year income (Social Security and her small nest egg) has a credit score of 749 which is considered "very good". She was actually over 800 for the past few years but when she went into the hospital last Fall and failed to pay ALL her bills for 2 months, she got rightfully dinged on her credit score and it was lowered to 650 ("fair"). It has been slowly climbing up every 3 months. Credit scores are determined by 1)how much total revolving debt you have, 2)how much possible credit card debt you can rack up (such as having a $15,000 credit limit on 1 card and a $10,000 credit limit on a 2nd card), 3)your payment history (late vs. on time), 4)length of having credit, and other NON-INCOME factors.

In a very broad statement, you could propose that poor people (define poor please) may have lower credit scores and that proposal could be somewhat accurate. But the REASON is not because they are poor...it's because of other factors. Heck, there is a fair percentage of the USA society that does NOT have credit simply because they pay with cash and do not own any kind of bank account. Trust me, the banks, credit card agencies, and government would love to get them somewhat off cash. The banks and credit card agencies would earn money while the government would be able to track their money flow and tax them appropriately.

I think you didn't read my post since I clearly said people who have over 800 aren't necessarily rich.

Anyway, rich people use credit cards all the time. Are you kidding me? It's a great way to earn free travel and cash back. I have mine set to autopay every month. I've made back thousands of dollars per year this way on stuff we were going to purchase anyway and for business expenses. Haven't paid a dime in interest since I was starting out in college. You're right in the sense that it won't make you rich, but it won't make you poor if you know what the hell you're doing and it makes for some great spare change to buy a some Apple gear. I also personally know very well a former CIO of a mortgage software company in NYC. Someone who has double digit millions tucked away. She uses credit cards all the time and has hundreds of thousands of free miles and now that she is retired she has used it a ton for travel. They're also generally a lot safer to use online than debit.

So many people have their head shoved where the sun don't shine when it comes to credit cards. Be responsible and they're great. If you don't trust yourself, don't get one. It's not difficult to figure out.
[doublepost=1559155848][/doublepost]

Let’s start with... the Apple card is not available yet to the general public so it’s impossible you heard anything of the sort. Then let’s go with ‘I heard’ is no evidence at all. I heard people with credit scores of 620 were getting approved. Of course i made that up, but hey, it’s just as valid.

So giving you the benefit of the doubt, what you may be confusing the current apple card with is past apple credit discussions. Two different systems, two different banks. Totally unrelated. So your comment that you need a FICO score of 800 for Apple Card is not factual.

https://forums.macrumors.com/thread...did-i-get-denied-for-apple-financing.1921116/

OMG you're the 17th person to say this.
[doublepost=1559155997][/doublepost]

I think ironically rich people don't have the highest credit scores cause they don't borrow enough. Though the richest may borrow a lot for big positions where this makes sense.

You're looking good. Have you lost weight?

I used to work for one of the largest banks in the country. The rich usually have something called "private client group" status or similar, where they can just walk into the bank manager's office and get pretty much whatever they're asking for, within reason. Depends on their status.

 

[brinary001]

So because Apple Credit Card isn't out to make extreme profit no bank want this? Sounds about right!

What's funny is, I think this will actually end up being a sleeper hit for Apple, where they see an onslaught of people signing up at launch, and then a steady flow of new customers thereafter. Goldman Sachs took a risk that, I think, they'll see pay off for them exponentially given a little time.

 

[PastaPrimav]

Let’s start with... the Apple card is not available yet to the general public so it’s impossible you heard anything of the sort. Then let’s go with ‘I heard’ is no evidence at all. I heard people with credit scores of 620 were getting approved. Of course i made that up, but hey, it’s just as valid.

So giving you the benefit of the doubt, what you may be confusing the current apple card with is past apple credit discussions. Two different systems, two different banks. Totally unrelated. So your comment that you need a FICO score of 800 for Apple Card is not factual.

https://forums.macrumors.com/thread...did-i-get-denied-for-apple-financing.1921116/

It wouldn't be 800 or there would be no one using it.
It will likely be over 700 though. No one with credit below 700 has things fully under control, and really shouldn't be getting another credit card anyway.

 

[Timemaster]

Lol I love the AMEX drones that have to find something to whine about with Apple Card.
Sorry. AMEX isn't the best thing on the block anymore.

Spoken like someone who never used an AMEX.
Lets be honest the rewards Apple card is meh at best.
I am considering looking at getting it Apple for some of the security stuff but it is not going to replace my main go to card of Amex for a lot of things. I go with what gives me the best benefits.
Lets compared my AMEX. It is 5% back on gas, drug store and grocery story and 1.5% on everything else.
I see your post more as the standard Apple is the best thing ever. Sorry hate to tell you this but Apple generally not the best thing out there. It may be good but often times not the best. This is one of those case.


I saw all this knowing I going to really think about getting it more the security and the better cash back when I use apple pay but still going to use the best card for what ever I am using. Right now Amazon card for amazon and whole foods as that is 3% cash back. Amex for everything else.

Apple has good security and some good cash back on other things. As for why citibank turning them down. I am willing to bet good money Apple is demanding almost all profit that comes from the card and citibank might be making next to nothing barely covering the cost and Citibank has to have all the risk.

 

[Abazigal]

Is it just me or has CNBC essentially just done Apple’s marketing for them? I am sure Apple and Sachs will still profit handsomely from this, but that Citi won’t be earning as much as they would like from the deal suggests a better proposition for consumers.

 

[fairuz]

You're looking good. Have you lost weight?

I used to work for one of the largest banks in the country. The rich usually have something called "private client group" status or similar, where they can just walk into the bank manager's office and get pretty much whatever they're asking for, within reason. Depends on their status.

Haha, thanks. They did treat me very nicely when I went from being a student to actually having a wage.

 

[NetMage]

heck, the card I've been using for 10+ years has all of those features. Zero fee. 1% return on most purchases, up to 5% on gas and groceries.

So when you say "zero fee", do you also mean no late fees, no foreign transaction fees?