The Apple Savings account, backed by Goldman-Sachs, attracted $1 billion in deposits just four days after its launch, thanks to its 4.25% annual interest rate and integration with the iPhone.
Users of the Goldman-Sachs-backed Apple Savings account made combined deposits of roughly $1 billion just four days after it opened, according to two persons with knowledge of the situation.
The savings account attracted deposits totaling around $400 million on the day it was launched. The major factors that aided the spike in account openings may be linked to its 4.25% annual interest rate and the virtually universal use of the iPhone, as banks now give an annual interest rate of less than half a percent.
Savings Accounts at Banks Are Not Enough
Banks have adopted a more reactive stance as the Fed is ready to raise interest rates once more:
According to Forbes, Crone Consulting’s CEO and founder Richard Crone said the following:
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. There’s an outflow to CDs, money market funds, and fintechs like Apple.
Bank failures may persist, as evidenced by recent events in March involving First Republic Bank and Silicon Valley Bank. This trend is due to declining customer confidence and the departure of significant deposits. The Fed attributes the second-largest bank failure in US history, First Republic Bank, to a lack of regulation and oversight.
What Makes Apple Unique
Recently, we discussed how Apple is utilizing savings in the face of fierce rivalry among financial institutions. However, Apple offers more than the market’s conventional FIs. For instance, Apple Card customers must own an iPhone running iOS 12.4 or later and pay no yearly or late fees. Additionally, they must have an active iCloud account and an Apple ID. Additionally, depending on the user’s credit history, the annual percentage rate (APR) for purchases might range from 16% to 27%.
Only owners of Apple’s credit card, the Apple Card, are eligible for Apple Savings. Users can access their savings account right from their iPhone in less than a minute. The high yield account receives all Apple Card spend incentives, often known as daily cash.