Personal Finance

Apple Card Reportedly Approving Some Subprime Applicants

With the highly-anticipated Apple Card rolling out to some iPhone users (with many more to come), we’re learning a bit more about the card and some of its unique features. However one of the more interesting stories to emerge so far involves who is getting approved for the new card. As CNBC reports, it seems Apple and its partner bank Goldman Sachs are reaching the subprime market, with applications maintaining higher-than-normal approval rates.

According to CNBC, the term “subprime” isn’t easily definable but typically describes consumers with credit scores around 660 (out of a maximum 850). Anecdotally, the network spoke with one new Apple Card customer who was approved with a credit score of 620. Ed Oswald told CNBC, “I was absolutely shocked I got it. I have a lot of collections from two or three years ago when I was in a really rough spot. When I heard it was with Goldman Sachs, I figured they were going for the high-income set.” That said, Oswald reveals that his Apple Card limit is just $750 and carries a 23.99% APR.

It seems there could be a few different reasons why Apple and Goldman Sachs might be extending the card’s availability so wide. First, as FinTech Today author Ian Kar told CNBC. “Apple is only making one card, so they have to target everyone. It’s not like they’re Chase with multiple cards like Sapphire Reserve to target a higher demographic and other cards for lower segments.” The other reason could have something to do with Apple’s late co-founder Steve Jobs. Sources told CNBC that Jobs actually explored the possibility of a joint credit card with Capital One back in the 90s. However among the problems the companies ran into was that Jobs “had an aversion” to rejecting customers.

Despite these reports of the Apple Card’s high approval rates, it’s still very possible to be denied for the new card. It should also be noted that, while this may be an opportunity for those with little established credit or who have made mistakes in the past to build their credit back up, potential applicants should carefully consider whether the card is right for them. With low credit limits like the $750 Oswald received, cardholders will need to be wary of their utilization rate. Experts suggest consumers use less than 30% of their credit limit on a given card — which amounts to just $225 for Oswald. Finally, as with all credit cards, consumers should be mindful about their spending, avoid making unnecessary purchases just to earn cash back, and strive to pay the balance in full each month in order to avoid paying interest.

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