A new survey of US consumers finds huge demand for Apple's new credit card. Issuers like Wells Fargo and US Bank could get hit hard.
Paris, France - April 21, 2016: Rear view of the new Apple iPhone SE on blue background, this spring Apple and Goldman Sachs will start issuing a:
Joint credit card paired with new iPhone features that will help users manage their money. Cardholders will earn cash back of about 2% on most purchases and potentially more on Apple gadgets and services."saying that the card will fail because: 1) The rewards aren't good enough; 2) Money management features won't attract cardholders; and 3) Apple doesn't have strong data and analytics capabilities.
Wells Fargo and US Bank would be the hardest hit: Roughly a quarter of their current credit cardholders intend to apply for an Apple Card. And about half of them intend to make the Apple Card their primary spending card--which could make a big dent in the two banks' credit card revenues.
In addition, among the expected Apple Card applicants who currently have a credit card, a quarter of them have a credit score below 680.at a seven-year high, this might not be a good time for Apple to issue credit cards to subprime consumers. But no need to worry, I'm sure that Goldman Sachs knows what it's doing.
It's hard to believe that many rewards cardholders will abandon the rewards they've accumulated on their current cards and shift their payment behavior to a new card.*The survey, conducted by Cornerstone Advisors, included 2,506 US consumers between the ages of 21 and 73 with a checking account and a smartphone. That's not everybody of course--but a pretty good representation of existing and potential credit cardholders.
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