From the article: Apple introduced high-yield savings accounts. This is interesting, what would be the motivation for somebody to use this? Is return noticeably better than other institutions? Why Apple is doing it at all?
Yes. It's significantly better than the average interest rate of savings accounts in general. Most of the big banks have abysmal interest rates for savings accounts. That said there definitely are options that provide a bit higher rate than Apple. The other reason would likely just be convenience.
Interestingly enough, there's a bit of a forced/easier savings as well for some folks. You can set your 'Daily Cash' (cashback you earn from an Apple Card) to deposit directly into the Savings account. It makes 'saving' a bit more seamless, and, indirectly, encourages spending on their Apple Card, I assume.
I've been hesitant to do this for multiple reasons:
- Does not work with budgeting apps yet (Mint.com in particular)
- No web interface yet, no easy way to do transfers without your phone. Having my life savings tied to a phone... a bit odd. It's a regular ACH account, but it needs more conveniences around it that other banks already have.
I love my Apple Card. I'm a huge fan of their app-first approach for everything, but a bank account is different. It should be easily accessible from any device.
Other banks are doing this excellently and have been for years, just without the fantastic app factor. Discover Bank's savings is at 3.75%. Ally is at 4%. Both with good apps, decent web interfaces, work with budgeting apps, excellent support and high interest rates.
These are all valid points, personally I don't plan on touching these savings for a long time (nor do I really need to track it using apps like Mint/RocketMoney/etc), but if you do then the Apple Savings account really isn't a good choice.
Personally I see it being tied to my phone as a positive, I don't really need to think all that hard about it, signing into an antiquated banking website, doing 2FA, etc etc etc.
Hopefully over time Apple adds these things, but they're certainly not a blocker for me.
Are you not in the slightest concerned that if someone steals and or hacks your phone, they can drain your savings? There’s already tons of iMessage zero days out in the wild, so unless you’re running lockdown mode and have a long, alphanumeric password, this seems like a big risk.
- I have far more faith in Apple's security model than a traditional bank's model.
- I assume Goldman Sachs has a decent policy for fraud/hacks (though someone can fact-check this).
- I'm not a millionaire, if I was I'd be using many different bank accounts, is someone going to exploit a likely-already-patched zero-day in one of the most locked-down operating systems to get my five-figure account?
> You may deposit or withdraw funds from your Account into or from Apple Cash. Transfers must be at least $1.00 and can be no more than $10,000. You may transfer no more than $20,000 per rolling 7-day period. We may place additional limits on the amount and frequency of transfers for the security of your Account
Seems to be just transfers to an Apple Cash account, which is primarily used for free Venmo-like peer to peer payments. Venmo has a similar $20k limit. I think if you're trying to transfer this much money, there are plenty of other transfer methods available.
> Is return noticeably better than other institutions?
It is on the higher end compared to other HYSAs. The highest I've seen is 4.81% compared to Apple's 4.15, but that's still better than 3.x% offered by a lot of HYSAs. And of course it's better than the .35% average for regular savings accounts. [1]
> Why Apple is doing it at all?
It's another mechanism to lock people into their ecosystem. You won't switch to Android if you've got funds in an Apple savings account.
You can get a bit more if you hunt around. Apple is counting on most people not thinking it's worth it to hunt around for the incremental APY that you can find. But the big banks pay much, much less.
Chase, the largest bank in the US, offers 0.01% APY for their savings account. BOA offers similar rates.
Goldman Sachs, the institution behind Apple's financial products, offers 3.90% APY to their Marcus clients, which is lower than Apples APY %.
Apple is providing APY bump to pump the market response to their product and the media coverage ("marketing expense"), which will then pump the stock at earnings, making everyone (execs) happy.
If you're already deeply in the Apple financial ecosystem perhaps it makes sense but if you're just chasing yield there are better options out there. SoFi will pay you 4.2%, and there are lesser known banks above that. Treasury money market funds (e.g. VUSXX) will pay you in the high 4% range (VUSXX is at 4.68%) and are exempt from state and local taxes too.
if you purposely pick savings account that are not meant to be high yield, and compare them to a high yield offer, of course you get that. these savings accounts aren't meant to hold large sums or accrue interest. they're meant to save up a couple of paychecks and move the money into something else. because believe it or not, people don't use savings accounts to earn interest. it's a temporary place to park a small liquid amount of money.
here in the real world, interest rates were increased, so all the high yield savings interest went up. mine is 3.5% w/ sally mae - like capital1's rate.
citibank is at 3.85 while discover is 3.75. less known ones like citbank are 4.75 and bask is 4.65.
apple is providing APY in response to the current interest rate, just like everyone else, and less than many others. it has nothing to with market response and media coverage, it has to do with Sachs being able to lend your savings back out as mortgages and loans an an increased rate. when the fed rate goes back down, so will all the rates offered by all the banks. this is literally how it does and always has worked.
the only thing apple is doing is inserting themselves between you and your savings account at sachs, for some god unknown reason.
