Digital Banking
Apple intros high interest savings account
April 18, 2023
Apple has dived deeper into banking by partnering with Goldman Sachs to deliver a savings account that offers a 4.15% interest rate — more than 10 times higher than the national average. This is 415 times higher than the 0.01% offered by Chase and Bank of America, according to a CNN Business report .
In order to access the account, customers must have the Apple credit card called Apple Card. The account has no fees, minimum deposits or minimum balance requirements, and customers can set it up on their wallet app. The account is insured by the Federal Deposit Insurance Corp.
Ted Rossman, a senior industry analyst at Bankrate, believes this could drive customers to switch from big banks to Apple.
However, from Apple's perspective, it may simply want to enhance customer loyalty, Rossman told CNN, since if customers are doing banking on Apple, they are less likely to switch to Android.
"Apple is creating this flywheel effect, an ecosystem of Apple cash," Rossman told the news outlet. "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."
One of the reasons for big banks not raising interest rates is they have more cash on hand than they need due to lower demand for borrowing and higher deposits, which decreases the incentive to lure in more depositors, according to CNN.
While other banks offer high interest savings account, Rossman believes the move from Apple could make those accounts more mainstream.
"The fact that Apple is involved makes it news," Rossman told CNN. "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."
Apple also offers additional financial services, such as the ability to apply for buy-now-pay-later loans between $50 and $1,000 for use with in-app and online purchases.
