In April, Apple announced that its Apple Card users can now access a high-yield savings account paying a 4.15% annual percentage yield (APR). This rate is over ten times the typical savings account APR offered by traditional banks. In fact, as of March 2023, the average savings rate for savings accounts was just 0.37%, according to the Federal Deposit Insurance Corp.
The savings account, offered in partnership with Goldman Sachs, features:
- No monthly fees
- No minimum balance requirements
And even though the Apple account is offered through Goldman Sachs, the 4.15% APR compares favorably to Goldman’s own high-yield savings product, Marcus, which carries a 3.90% APR. Apple’s APR also outpaces Capital One’s high yield savings product which pays 3.5%.
The account maximum balance is $250,000 and comes with full Federal Deposit Insurance Corp (FDIC) coverage. The FDIC protects the money depositors place in insured banks in the unlikely event of an insured-bank failure.
Customers react favorably to Apple's moves
Apple’s high-yield savings account is an exciting development for US banking customers. Apple customers are notoriously loyal to their iPhones, and now they can easily earn over 4% on their savings while having their money banked with their favorite company. This move may challenge traditional financial services institutions to step up their customer service and retention game in order to keep customer deposits from fleeing to Apple.
According to a recent interview with Forbes, just four days after the product launched, almost a quarter of a million customers applied for the savings account.
Can traditional banks keep up?
Traditional banks, especially regional banks in the US, have not had an easy past few months. After news of Silicon Valley Bank's collapse rocked the US banking system, two additional regional banks have fallen since. Americans have since moved billions of dollars in deposits from smaller banks to the nation's largest institutions.
Though Apple isn't becoming a bank, rather, partnering with Goldman Sachs, it's still cause for US banks to take a critical look at their operations. This may push big players like JP Morgan Chase and Bank of America to increase their high-yield savings rates, especially as the Fed has continued to increase the interest rate.
Apple’s entry to the financial services sector may be just the beginning for tech giants elbowing their way into the banking arena. Companies like Google, Amazon and Meta are surely keeping an eye on Apple’s success in the space as they consider their next fintech moves. According to the latest results of Gallup’s annual “Trust In Institutions” survey, just 27% of Americans expressed having a “great deal or quite a lot” of confidence in their banks. That number is down from its peak of 60% in 1979. Clearly, consumers are becoming more willing to consider, and trust, non-traditional solutions for their banking needs. This could present a huge opportunity for Apple and its tech counterparts.