The Apple Credit Card was introduced over the summer, and has been immensely popular. Personally it’s not a card I have much interest in, because it’s not that lucrative for someone who is good at maximizing rewards.
However, we all know that Apple has a loyal following, and given the easy sign-up process and sleek marketing, it’s not surprising so many people have picked up this card.
Accusations Of The Apple Card Being Sexist
There is now widespread discussion about whether the Apple Credit Card is sexist, to the point that this is now being investigated by regulators.
All of this started on November 7, when tech entrepreneur David Heinemeier Hansson Tweeted the following:
The @AppleCard is such a sexist program. My wife and I filed joint tax returns, live in a community-property state, and have been married for a long time. Yet Apple’s black box algorithm thinks I deserve 20x the credit limit she does. No appeals work.
He didn’t stop there, and has Tweeted more than a dozen times about this. Then Apple co-founder Steve Wozniak got involved, sharing a similar data point:
The same thing happened to us. We have no separate bank accounts or credit cards or assets of any kind. We both have the same high limits on our cards, including our AmEx Centurion card. But 10x on the Apple Card.
Obviously isolated data points as such don’t make something true, but looking at the responses to their Tweets, it seems like a lot of people have had similar experiences.
Of course there’s potentially some level of confirmation bias, especially for those who don’t understand how credit limits are assigned, and how credit scores work. But something doesn’t seem to be adding up here.
Regulators Are Investigating The Apple Card
New York’s Department of Financial Services has now contacted Goldman Sachs (which runs the Apple Card), and plans to investigate. As the DFS said in a statement:
“We will be conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex.
Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law.”
Meanwhile Goldman Sachs said the following in a statement:
“Our credit decisions are based on a customer’s creditworthiness and not on factors like gender, race, age, sexual orientation or any other basis prohibited by law.”
Could There Be Merit To This?
Not surprisingly, this has generated a lot of controversy on Twitter. Looking at the comments on the discussion, people seem to fall into one of two general camps:
- Many people had similar experiences, or agree that this is clearly part of systematic discrimination
- Many people are telling the soy latte drinking, virtue signaling, liberals to be quiet
Actually, I guess that describes just about every Twitter thread. 😉
As much as Hansson and Wozniak are brilliant guys, this isn’t really the area in which they specialize. For example, Wozniak talks about how his wife has the same high credit limit as him on the Amex Centurion Card, though in reality the card has no pre-set spending limit, so in that sense everyone has the same limit on the card. 😉
What Can Impact Your Credit Limit?
With the above out of the way, what can actually impact the credit limit you get on a card? Ultimately this is proprietary information, and every card issuer has a different formula.
However, there are a variety of factors that potentially come into play:
- Your credit score
- Your income
- The length of your credit history
- Existing debt
- Your existing credit lines
- Macro economic forces, like the state of the economy, etc.
Your credit score factors in many of the other things that could impact the credit limit you’re given. But there’s not full overlap.
It seems like many of these things should be factored in, based on the data points we’re seeing:
- Married couples with joint bank accounts should have similar combined incomes
- Many husbands are reporting that their wives have credit scores that are as good or better than their own credit scores
The only obvious potential wildcard that I don’t really see addressed is how the overall available credit compares between spouses. If you and your spouse have the same credit score, similar credit history, the same combined income, same debt (or lack thereof), etc., the one major factor that leaves is your overall available credit.
In other words, all else being equal, if you have a total of $20,000 of available credit across your cards, and your spouse has a total of $200,000 of available credit across all of their cards, it’s logical that they would be given a lower credit limit, since they’re already more “exposed.” But I don’t see anything one way or another indicating whether that’s the case.
I’ll be curious what comes of the investigation as to whether or not the Apple Card’s algorithm is sexist. Unfortunately this would be far from the first time that an algorithm like this discriminates based on gender, race, etc.
We can’t say with certainty that the algorithm is sexist based on the data points (so far), but it sure seems to me like there might be something to this. It’s one thing if many wives were getting mildly lower credit limits than their husbands (which could be attributed to a variety of factors), but the number of data points we’re seeing of exponentially different credit limits is alarming…