UPDATE: April 2, 2020: Apple and Goldman Sachs are letting Apple Card users defer their April payments in a continuation of a move they announced last month. However, customers who deferred their March payments must opt in again by messaging a support representative via the Wallet app on an Apple device, the tech giant said.
“We understand that the Covid-19 situation poses unique challenges for everyone and some customers may have difficulty making their monthly payments,” Apple wrote in an email to customers. “If you previously enrolled in the Customer Assistance Program in March, you will need to enroll again.”
The bank will also allow borrowers using its Marcus lending platform to skip March loan payments without accruing interest.
Goldman Sachs' move follows a similar decision made by Citigroup last week to waive March payments for its retail bank customers and small business customers on an as-needed basis. Neither bank specified whether these policies would remain in place beyond March as the pandemic response evolves.
Many workers in the service industry, such as retail and food service, are seeing reduced hours and pay as stores, restaurants, bars, movie theaters and gyms shutter due to the COVID-19 outbreak across the United States.
But those aren’t the only workers affected. Contractors, entrepreneurs and freelancers also face less work and, as a result, less pay, as the economy slows down due to efforts to break the coronavirus tidal wave.
For those card holders, skipping March payments without penalty relieves the pressure of burgeoning financial stress and also strengthens their relationship with their bank. Banks looking to earn the trust of their customers and enact policies that benefit those customers has been a common trend in the banking industry, in part sparked by competition from fintechs.
Depending on how many months the pandemic keeps some sectors of the economy shut down, however, card holders may be even less able to make April or May payments. Yet banks may not be able to waive several months' worth of credit card payments, or if they do, they may see sizable losses.
Credit card companies rely on credit card interest as their primary source of revenue, and according to The Washington Post, big banks reported "blockbuster profits" in 2019 due to their customers’ credit card payments.
JPMorgan Chase, for example, earned a record $36 billion in 2019, attributed partially to an 8% increase in credit card loans. Citigroup earned $19 billion in 2019, and also saw an 8% jump in credit card loans in the U.S., according to The Post.
Other businesses are also taking steps to alleviate financial hardship for those hit hardest by the pandemic. General Motors, for example, is offering zero percent auto financing for seven years and deferring auto payments for four months for customers with good credit.
The Federal Reserve also slashed interest rates to near zero in a dramatic attempt to boost the flailing economy. The last time the Fed cut interest rates to near zero was during the 2008 financial crisis, suggesting the previously red-hot economy may be headed toward a correction.