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The account’s eye-catching 4.15% annual return, plus the ubiquity of iPhones, is likely the main driver for account openings, especially when the average bank is paying less than half a percent. By the end of launch week, roughly 240,000 accounts had been opened, one source adds. The account is offered through a partnership with Goldman Sachs
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“Banks have quickly responded to the Fed’s interest rate hikes with higher mortgage and car loan rates, but savers have seen little to no increase in traditional bank deposits or savings accounts,” Richard Crone, CEO and founder of payments firm Crone Consulting, says. “There’s an outflow to CDs, money market funds, and fintechs like Apple.”
Apple’s savings account is entering a fierce competition amongst financial institutions to attract and retain deposits following a cascade of bank failures last month. First Republic Bank
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While First Republic grapples with unprecedented deposit outflows, Goldman Sachs is rapidly pulling in consumer funds by tapping Apple’s 2 billion iPhone owners. The new savings account is only available to holders of Apple’s credit card, Apple Card. Clients can open a savings account in less than one minute directly from their iPhone. Apple Card spend rewards, called daily cash, are automatically directed into the high yield account.
Clients can track their balance and interest earned from a dashboard integrated with Apple’s digital wallet. Before the Apple savings account, daily cash rewards were automatically deposited into Apple Cash, a prepaid digital card held in the iPhone’s digital wallet and issued by Green Dot Bank. Crone Consulting estimates that $3.8 billion is annually deposited into Apple Cash from the Apple Card, funds which will now make their way into the savings account. Apple High Yield Savings accounts cannot exceed the $250,000 FDIC insurance limit.
Many traditional regional banks are struggling to maintain net interest margins in the wake of the Fed’s massive interest rate hikes and as a result few have matched Apple’s 4.15% on FDIC insured savings account rate. Numerous digital banks have been offering higher yields, Bask Bank, a division of Dallas’ Texas Capital Bank, for example, offers a savings account with a 4.75% annual rate today. Fintechs including neobanks Current, Varo and LendingClub
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