Goldman Sachs is tightening lending before the handoff to Chase. Before the announcement my preapproval for the Apple Card was $10K. Ever since then it only shows $4K.
GS let in subprime customers that most large banks woujld have flat out denied.
@AndrewF wrote:
@SeanA wrote:Maybe they're not giving limit increases until the card switches issuers?
Goldman let Apple steamroll them. Apple took no credit risk. They demanded that GS approve everyone who applied from people who aren't gonna pay because they have a long documented record of not paying, to people with an 850 FICO score that pay all their bills.
GS had little experience in consumer banking, especially with pricing subprime credit risk, suing people, and finding things to attach to, or actively mitigating credit losses by selling bad debt.
From Apple's perspective, who cares how that iPhone got paid for? Whether it was a consumer who pays their bills or the bank taking a loss, Apple still wins. They completely steamrolled Goldman Sachs.
Chase bought that product at a presumably steep discount to account for all the people it's gonna have to work through the lawsuit mills and send cancellation letters to regarding their Apple card that should have never been issued.
In that environment, I find it improbable that Chase hasn't stipulated that GS freeze credit limits before the handover. Why would you want an incompetent bank that got steamrolled by Apple actively making bad credit risks more dangerous?
When a dominant consumer card issuer like Chase evaluates taking over a distressed, subprime-saturated portfolio at a steep discount, their primary operational directive is portfolio stabilization. Chase has zero desire to let an exit-seeking, incompetent underwriting partner actively escalate credit limits or expand risk profiles right before the ledger is transferred.
I know firsthand what happens when something like this is allowed, at least on a small scale. Before selling the building I lived in previously, the landlord getting ready to sell it ensured 100% occupancy by writing off everything that tenants who should have been evicted owed him, then claiming they were all up to date on the rent and the building was completely full. Added to the many problems with the building he didn't disclose, the new landlord had the entire operation fall apart almost overnight.
Now Apple has to, again, find a way to shove overpriced iPhones and MacBooks into the hands of people who do not want to go out and earn $1,000 using their own two hands and sweat off their brow, and that's where Klarna comes in. They handle the untouchables.
This is how Apple props up sales and maintains the flow of overpriced devices, including to people who can't pay for that, without a massive sales drop.
Or in more clinical language...
When traditional credit cards dry up, apps like Klarna and financing installment schemes step in to capture the subprime tier. They chunk an overpriced $1,000 tech brick into small, double-digit weekly payments to completely scramble the consumer's internal budget calculus.
This structure allows Apple to continuously bypass wage stagnation, pushing luxury hardware into the hands of consumers who lack the liquidity to buy the asset outright. It prevents a catastrophic drop in retail sales metrics by turning the general population into permanent, subprime installment tenants.
What the consumer is not supposed to do is realize they've committed more money than the device costs to something they do not own, using money they do not know will come in.
So much for them freezing credit limit increases...
