Goldman Sachs bank is seeking another company to take over its GM credit cards as it attempts to exit consumer lending entirely, after expenses rose too high to make the attempted expansion of its business viable.
The bank wants to transfer its GM credit card and Apple credit card services to a different lender, the Wall Street Journal reports, after selling off the personal loan business it added to its holdings in 2022 with the purchase of GreenSky.
So far, the most likely buyer for both the Apple credit card and the GM credit card appears to be American Express. However, public details are lacking at this point other than the bare fact Goldman Sachs has communicated with Amex about the cards, so the ultimate fate of both card services remains unknown.
In the case of GM card services, Goldman Sachs has noted that car dealerships seem to make little effort to induce their customers to use The General’s card. This is despite the fact that the credit cards were mostly offered to GM vehicle buyers and owners in the first place.
The cards provided points rewards redeemable for discounts on a new vehicle purchase. Credit card users earned 5 percent on the first $5,000 worth of net purchases and 2 percent thereafter, with non-expiring points and no annual fee.
The bank originally showed interest in acquiring the automaker’s credit card services back in the second half of 2020. Goldman Sachs, Barclays, and several other banks competed to pick up the company’s card as the original contract with Capital One started counting down its final 12 months, with the previous issuer uninterested in continuing to support the card.
In the event, the car company ended up selling its credit card to Goldman for $2.5 billion in October 2020, possibly in response to disruptions caused to credit spending by the COVID-19 pandemic. The new issuer offered 7x reward points for purchases of General Motors products and services and 4x points on non-General Motors purchases. A survey by Goldman found almost 70 percent of credit card users target purchases on their cards to earn rewards points, depending on how rewards are offered.
Now, as it prepares to divest itself of the GM credit card, Goldman Sachs assured employees of the service it will continue to operate the card until a purchaser is found. If the employees are terminated, they will receive severance equal to a full year of their current salary.