Apple and Goldman Sachs launched a new high-yield savings account on Monday that offers a 4.15% interest rate, more than 10 times higher than the US national average.
The move is one of many that Apple has made in recent months to increase its financial services footprint — adding some lofty competition for customers in the already-crowded banking sector.
The interest payout on Apple's savings account is about 415 times more than the 0.01% that Chase and Bank of America offer their basic savings customers and could incentivize customers to move their money away from the big banks and into the Apple ecosystem, said Ted Rossman, a senior industry analyst at Bankrate.
That's good news for Apple, but the company likely sees this as a way to further enhance customer loyalty and less of a way to compete against big banks, said Rossman.
Apple's savings account is managed through Apple products and users must have Apple's credit card, simply called Apple Card, to qualify for one. If you're managing your credit and your banking with Apple there's a much smaller incentive to switch to an Android phone, he explained.
"Apple is creating this flywheel effect, an ecosystem of Apple cash," he said. "It's very much a loyalty play because it's a multi-level process: To get the Apple credit card you need the phone, and to get the savings account you need the credit card. This isn't typical — if you go with American Express, you can get a credit card without opening a bank account."
That could also give Apple more insight into the financial data of its customers, another helpful advantage for the company.
Apple's savings account is very user-friendly: it comes with no fees, no minimum deposits and no minimum balance requirements, according to Apple, and users will be able to set up and manage their account directly in the wallet app on their iPhones. The Apple savings account through Goldman is also insured by the Federal Deposit Insurance Corporation.
Chase and Bank Of America likely aren't quaking in their boots but this could move the needle on stubbornly low interest rate payouts.
The biggest banks in the United States have refused to shift their savings rates higher, even as the Federal Reserve has lifted its benchmark rate to between 4.75 and 5% to combat sticky inflation.
That's likely because they have more cash than they need: Pandemic stimulus money, lower demand for borrowing, and an influx of recent deposits after the regional banking crisis mean they don't have much incentive to pay higher interest rates to woo more depositors.
And Apple's savings account is hardly the best out there, either. Bankrate puts it at number 11 on its list of best interest rates. UFB Direct offers a savings account with more than a 5% annual percentage yield. Vio Bank and CIT Bank offer 4.77% and 4.75% interest rates.
But those aren't household names.
"The fact that Apple is involved makes it news," said Rossman. "High-yield accounts have been available for a while, but this makes them more mainstream. From an industry perspective that's notable and may incentivize some change."
A suite of financial services: The news comes two weeks after Apple announced it would enter the increasingly popular "buy now, pay later" industry. Apple Pay Later allows customers to pay for their purchases in four installments over six weeks.
The program also allows users to manage their payments through Apple Wallet, and they can use the app to apply for loans between $50 and $1,000 which they can use for in-app and online purchases at stores that accept Apple Pay.
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