Goldman Sachs credit card practices under investigation by US watchdog

AppleInsider · August 4, 2022 7:09PM

Goldman Sachs, Apple's partner bank for its Apple Card offering, has revealed that it is facing an investigation by a U.S. consumer watchdog

Credit: Apple

The bank revealed the investigation in a quarterly 10-Q form filed Thursday with the Securities and Exchange Commission. According to the filing, the Consumer Financial Protection Bureau (CFPB) is probing Goldman Sachs' credit card account management practices, refunds, and billing error resolutions.

The filing offered no other details about the probe, and did not name the specific credit cards or accounts that are included in the investigation.

However, it's likely that the investigation is centered on the Apple Card. Other than a co-branded credit card with General Motors, the Apple Card represents Goldman Sachs' only consumer credit card product.

This is not the first time that Goldman Sachs has been investigated for credit card products. In 2019, the bank was accused of discriminatory behavior on allegations that longer lines of credit were distributed based on gender.

In 2021, the New York State Department of Financial Services cleared Goldman Sachs of those claims after an investigation.

The Apple Card hasn't been spotless since its debut in 2019. Issues has included erroneous cash back rates and system problems that prevented users from making bill payments or accessing account management features.

Read on AppleInsider

tdknox · August 4, 2022 8:17PM

The interest rates are high. I have >800 credit and still have 21%. But I have no complaints about their service or conflict resolution.

rob53 · August 4, 2022 8:26PM

I almost always pay off my Apple Card monthly but I don't believe we're charged interest as long as we pay something. I could be wrong but I thought this is the way it's done. I know I'm not paying interested when buying Apple products on a 1 or 2 year purchase agreement.

22july2013 · August 4, 2022 9:07PM

scstrrf said:

my interest rate only recently went down from 23.99% to 21.99%.
Questionable at best, even if such usurious rates are standard practice in USA.

Those 20% rates are calculated per year, and they are nothing when compared to the fact that you can get cheques "cashed instantly" at many specialty shops, and they charge only 3% of the entire value of the cheque (plus a fixed fee.) So if you get your money 7 days earlier than you would have if you had waited for the cheque to clear, you are paying 3% per week for a loan, not per year. That's equivalent to 156% interest rate per year (52 times 3%) by comparison to the 20% you are concerned about.

I agree with you that that 156%/year is usurious.

mikethemartian · August 4, 2022 9:09PM

scstrrf said:

As an Apple Card user I like the product, but my interest rate only recently went down from 23.99% to 21.99%.

Questionable at best, even if such usurious rates are standard practice in USA.

Credit card purchases are unsecured debt that’s why the rate is so high. It is a risky loan. The card issuer has no collateral of the borrower that they can sell to offset the borrower not paying. All they can do is threaten to adversely report to the credit bureaus and sell the debt to a collector at a large discount.

sdw2001 · August 4, 2022 9:55PM

scstrrf said:

As an Apple Card user I like the product, but my interest rate only recently went down from 23.99% to 21.99%.

Questionable at best, even if such usurious rates are standard practice in USA.

It’s not questionable at all. You just don’t like it. That is a standard credit card interest rate. They often run promotions where it’s 0% for a certain time.

danox · August 4, 2022 10:13PM

Goldman Sachs involved no Apple Card for me.

I hope Apple Pay isn’t attached, it isn’t.

https://en.wikipedia.org/wiki/Apple_Pay#History

rwes · August 4, 2022 10:38PM

Like someone else mentioned, and as we most already know, it's best to not carry balances but if you have to, the rates being mentioned seem to be common now even if you've got a decent credit score.

I've kept one of my first credit cards (a little over 20 years now) which has ~ 6% rate, but the card has no 'perks' so I almost never use it. If I ever need to make a purchase though that I couldn't pay off by the needed date to avoid interest, I would probably fall back to that card.

rwes · August 5, 2022 12:00AM

JP234 said:

Goldman Sachs cheating their customers? Say it ain't so! Who ever heard of an investment bank engaging in corrupt and dishonest practices? (cough, cough: WellsFargo). And I know that no former CEO appointed by Trump as Treasury Secretary would even think of it (cough, cough: Steve Mnuchin)!

Not that I disagree, but don't make it political. IMO, most banks (bank execs, people calling the shots, not the 'low level' employees) are in the business of cheating their customers. Because lets face it, the shareholders are a minority of the actual customer base (if even customers in the same sense at all) and more often that not, what's probably in shareholder interest (maximum profit) does not align with majority customer interest.

newvideoaz · August 5, 2022 4:16AM

One nice feature of the Apple Card is that using your Wallet App on an iPhone - as you dial your payment amount up on the circular payment dial, it changes color to give you a clear visual alert when the amount you’re submitting covers any carry forward balance and avoids interest charges. Of course some folks just clear their entire balance regularly, but if you have both recurring charges like product purchase installments and impulse purchases mixed into your balance, It’s a simple, but extremely useful UI design in service of not making payment amount mistakes. And clearly the APR will be different for each cardholder. If they had proposed 21% I simply wouldn’t have signed up. And have been quite glad I did.

beowulfschmidt · August 5, 2022 11:52AM

rob53 said:

I almost always pay off my Apple Card monthly but I don't believe we're charged interest as long as we pay something. I could be wrong but I thought this is the way it's done. I know I'm not paying interested when buying Apple products on a 1 or 2 year purchase agreement.

If you have a balance at the end of the month and any portion of that balance was carried over from the previous month, you'll likely pay interest on that portion. The exceptions are purchases made after some arbitrary date, usually the "statement date" on a traditional credit card, and those purchases made made during a 0% offer period.

When you buy Apple products on an agreement, the monthly installment isn't usually posted to your account until the month it's due, and won't affect any monthly balance until it's actually posted.

I have no recollection of what my Apple Card interest rate is, though I vaguely remember getting a recent statement about a change. I've managed to pay it off completely every month so far.

mike1 · August 5, 2022 1:29PM

rob53 said:

I almost always pay off my Apple Card monthly but I don't believe we're charged interest as long as we pay something. I could be wrong but I thought this is the way it's done. I know I'm not paying interested when buying Apple products on a 1 or 2 year purchase agreement.

You are correct. I have never paid a penny in interest on my card.

scstrrf said:

As an Apple Card user I like the product, but my interest rate only recently went down from 23.99% to 21.99%.

Questionable at best, even if such usurious rates are standard practice in USA.

Depending on your credit history, there's nothing abnormal about that.

In fact, since the interest rates are tied to the prime, they have increased recently.

jimh2 · August 5, 2022 6:56PM

My tact when I think I am being discriminated against or do not like a service…I quit and find another.

maciekskontakt · August 5, 2022 7:53PM

rob53 said:

I almost always pay off my Apple Card monthly but I don't believe we're charged interest as long as we pay something. I could be wrong but I thought this is the way it's done. I know I'm not paying interested when buying Apple products on a 1 or 2 year purchase agreement.

The credit card average balance would tell you your interest you pay. If you do not have monthly balance carried over to next month then you pay zero interest. I am from financial IT and I worked at Goldman already four times (I was VP there too once, but I consult from time to time there and I know engineers and managers in credit card space as I worked with them elsewhere before). On top of that, I worked in credit processing company that processes Apple credit cards and I had to do with that quite a bit (hence now you how I learned PCI DSS and warned Apple legal that they cannot be credit processor and custodian of customer personal information at the same time).

maciekskontakt · August 5, 2022 8:01PM

mike1 said:

Depending on your credit history, there's nothing abnormal about that.
In fact, since the interest rates are tied to the prime, they have increased recently.

Not exactly true. Credit history is translated to rating by rating agencies (not by credit card issuer or credit issuer). One of them is Experian. Your rating is one thing and what credit issuer is doing with it is another and it is not carved in stone that you must get lower rate because others do that. This is competitive open market (not socialistic regulated one wit the same on all institutions). So expensive banks that have different model may not lower your rate by much (they may increase your credit limits instead based on excellent credit score) while others may decide that they can afford financial risk as you are lower risk client and lower your interest rate. However, there are other factors to credit card and no bank will lower rates below certain levels. You pay interest mainly for risk that you are part of for bank, but there are market variables too.

maciekskontakt · August 5, 2022 8:08PM

danox said:

Goldman Sachs involved no Apple Card for me.

I hope Apple Pay isn’t attached, it isn’t.

https://en.wikipedia.org/wiki/Apple_Pay#History

What a terrible loss with you. I am not sure how much you know Goldman and how much it changed over years. I worked there 9 years total between 2003 and 2022. They are as liberal now as you are and almost all old staff including CEO is gone for many years. They are managed now by people of type like Google and Amazon and in fact few of them just came from Google and Amazon. They have nothing to do with people who were involved in 2008. I personally encountered attitudes in Goldman in old times and new times recently when i joined for few projects. It is night and day difference.In fact probably 80% of staff from those times left the firm. The similar situation is in Microsoft. This is not the same company as in Ballmer and earlier times.

It is time to verify your opinions and views rather than keep blinders over your eyes.

maciekskontakt · August 5, 2022 8:14PM

mikethemartian said:

scstrrf said:

As an Apple Card user I like the product, but my interest rate only recently went down from 23.99% to 21.99%.

Questionable at best, even if such usurious rates are standard practice in USA.

Credit card purchases are unsecured debt that’s why the rate is so high. It is a risky loan. The card issuer has no collateral of the borrower that they can sell to offset the borrower not paying. All they can do is threaten to adversely report to the credit bureaus and sell the debt to a collector at a large discount.

Not all true, but mostly correct. There are secured credit cards. capital One was issuing such cards. You had to have cash balance associated with it in the bank. You cash balance must be retained above certain level and this is security. Now as far as FDIC securing them you are right - they are not.

maciekskontakt · August 5, 2022 8:20PM

rwes said:

Like someone else mentioned, and as we most already know, it's best to not carry balances but if you have to, the rates being mentioned seem to be common now even if you've got a decent credit score.

I've kept one of my first credit cards (a little over 20 years now) which has ~ 6% rate, but the card has no 'perks' so I almost never use it. If I ever need to make a purchase though that I couldn't pay off by the needed date to avoid interest, I would probably fall back to that card.

Young people have to learn hard way that credit card is one the most expensive way to get credit and that spiral of debt starts there and it is very easy to get into it by not paying all balance within 1-2 months. Then they wonder why they cannot buy car or home later or get any loan. Well the balance is registered by rating companies - the same that are checked for score when you apply for loans. Nothing is private there and creditor goes in first step to avoid risk of not getting money back and making profit on top of it.

In other words use credit card for daily and pay balance right away. in worst case scenario keep the balance for 1-2 months only and treat it as very short term loan in some extreme situations that occur in life. That fancy piece of plastic or it's version on smart device is very expensive.

netrox · August 5, 2022 11:59PM

I don't use Apple Card for anything but Apple - with it, I get 3% discount and the installation payments is zero interest plus 3% discount. It doesn't matter what the interest rate is.

danox · August 7, 2022 2:40AM

rwes said:

JP234 said:

Goldman Sachs cheating their customers? Say it ain't so! Who ever heard of an investment bank engaging in corrupt and dishonest practices? (cough, cough: WellsFargo). And I know that no former CEO appointed by Trump as Treasury Secretary would even think of it (cough, cough: Steve Mnuchin)!

Not that I disagree, but don't make it political. IMO, most banks (bank execs, people calling the shots, not the 'low level' employees) are in the business of cheating their customers. Because lets face it, the shareholders are a minority of the actual customer base (if even customers in the same sense at all) and more often that not, what's probably in shareholder interest (maximum profit) does not align with majority customer interest.

Merely mentioning Trump and Mnuchin isn’t political they are the high priests evil business men…..

Goldman Sachs credit card practices under investigation by US watchdog

Comments

Goldman Sachs involved no Apple Card for me.

Goldman Sachs involved no Apple Card for me.