When I turned 18, one of the first things I did was sign up for a Best Buy store card. If I look at my credit report, it’s my longest running active card (which means I’ll never cancel it since it helps my credit report). Over the years, I’ve bought almost all of my electronic items there. I always take advantage of their free financing offers. A recent item I bought using this method was my HomePod. It came with six months of free financing. This financing offer was a huge part of the reason I picked it up when I did. While I had the cash, being able to pay for it over a few months was a huge consideration on when I purchased it. Recently, rumors are spreading of Apple and Goldman Sachs partnering for a new credit card. While Apple currently has a branded credit card with Barclays, I think this new partnership with Goldman Sachs could be a big win for consumers and for Apple. We don’t know all the details, but I hope they offer similar options to a true “Apple Store credit card”.
Boosting Sales with Free Financing
With my Best Buy credit card, I know that I can usually purchase all my electronics on a minimum of six months of free financing. As long as I pay it off within that time, I am not charged any interest. Best Buy frequently runs specials for a year or even eighteen months of free financing. This strategy should be something Apple mimics with their new credit card. They occasionally offer this with their Barclay’s card, but if consumers would always count on getting free financing offers with an Apple Store credit card, they could make purchases sooner rather than saving up their money. Would a consumer who was on the fence about a new iPad or MacBook Air pull the trigger if they could get a year to pay for it interest-free? Apple could offer the Apple Store credit card at checkout as a way to close the sale.
The iPhone Upgrade program has been a big hit with consumers as a way to always have access to the latest iPhone. An Apple Store credit card would be a way to expand access to all of Apple’s products with interest-free monthly payments. In fact, the main reason I bought my iPad Pro from Best Buy over the Apple Store was for the free financing offer. As Apple’s prices are rising, consumers might become more likely to hold onto old devices. But if Apple can offer a way to pick up a new device with no money down, that could encourage more frequent upgrade cycles.
Apple Store Rewards
One of the reasons I have the Apple Barclays card is for the App Store/iTunes rewards. In fact, I usually get every other month of Apple Music paid for from iTunes rewards via Barclays. Apple would be able to offer App Store rewards that could then be used to pay for Apple Music, iCloud Storage, and Apple’s rumored upcoming video and news subscription products.
The Apple Experience in Banking
Apple prides itself on providing a great experience with its software and hardware. As it moves to provide that same experience with all of its services, banking is an aspect they could easily make a big difference with finances.
If this credit card takes off, they could easily transition to additional finance products like an Apple Pay debit card (similar to Venmo’s MasterCard). What are Apple’s long term ambitions in this industry? I don’t know, but I do know they have a lot of credit cards on file for iTunes and the App Store. Most people hate their banks and credit card vendors, so I think Apple has an opportunity to drive services revenue, sell more hardware in their stores, save on credit card transaction fees, and offer the best experience for consumers.