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Cramer Says Apple's Credit Card Up Against Low Expectations

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Cramer Says Apple's Credit Card Up Against Low Expectations

Apple Inc. (NASDAQ: AAPL)'s new venture into the world of credit cards could be successful simply due to the fact that the expectations for it are low, according to CNBC's Jim Cramer.

'Found Money'

Apple's new credit card represents "found money" for the company, as it is a new business with zero associated risk, Cramer said during his "Mad Money" show Thursday.

Cupertino's financial partner Goldman Sachs Group Inc (NYSE: GS) will issue the credit card and "take on all the risk" on its end, the CNBC host said. 

The Street's expectations for an incremental boost to Apple's total profit are minimal, even though the global payment space represents a $100-trillion total addressable market, Cramer said.

There's no reason to think the Apple-branded card won't be able to attract customers with a cashback offer, he said. 

"Is it enough for you to switch to Apple's card if you're on another ecosystem?" Cramer asked. "Why not? I just did."

Goldman Sachs will also benefit from the partnership, as the bank is looking to diversify its business away from Wall Street and more toward Main Street the CNBC host said.

If the bank is able to generate 10 million cards through Apple's ecosystem, it will "cushion the bank's episodic nature," he said. 

Warren Buffett

Billionaire investor, large Apple shareholder and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett told CNBC's Becky Quick Thursday that Apple holds one key advantage: its massive size means it can "afford a mistake or two."

The payment space is a "huge, huge game," and Apple's entrance isn't necessarily a concern for Buffett's other investments, notably American Express Company (NYSE: AXP), he said. 

"I like our 18-percent position in Amex and I like our 5.5-percent position in Apple."

Related Links:

Analyst: Apple's New Credit Card Bodes Well For Green Dot

Two Pros Offer Tech Stock Ideas After Apple's Presentation

Photo courtesy of Apple. 

Posted-In: Apple Credit Card CNBC credit card Jim Cramer Warren BuffettNews Tech Media Best of Benzinga

 

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