Apple launches high-yield savings account for card users in the United States

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In mid-April 2023, Apple took another major stride in giving conventional banking institutions a run for their money with the official launch of a high-yield savings account for its Apple Card users in the United States. The tech giant initially announced the new financial product back in October 2022. However, at the time, the firm did not reveal what interest rate it would be offering to its users owing to fluctuating rates amid the current macroeconomic environment. In April 2023, though, Apple revealed that it would be offering savings account holders with a 4.15% annual percentage yield (APY).

• The APY offered by Apple is highly competitive and also much higher compared to the majority of the savings account offered by financial institutions in the United States. Goldman Sachs, Apple’s partner for launching a savings account, itself pays 3.9% APY to customers having a savings account with the firm. The fact that Apple is offering more compared to its strategic partner indicates the strong position of the tech giant in the financial services market.

The high-yield savings account has been specifically designed for Apple Card users. Previously, the firm offered no way for its card users to grow their Daily Cash, the rewards that they receive when making payments using their Apple Card. However, with the introduction of the new banking feature, the rewards are deposited directly to their savings account which generates a return.

To make the savings account more attractive for its Apple Card users, the firm is offering the service with no fees and with no minimum balance requirement. The timing of the launch is also expected to work in favor of Apple and its new offering, as the soaring interest rates continue to cause havoc at some of the biggest financial institutions in the United States. Another factor that is likely to boost the growth of the high-yield savings account is the large and loyal customer base of Apple.

• The recent numbers from Forbes have already indicated the growing popularity of the new banking product, as the report states that the high-yield savings account attracted nearly US$990 million in deposits in just four days of its launch. On the first day itself, the banking product attracted nearly US$400 million in deposits. The report further revealed that over 240,000 accounts were opened during the initial four days of the launch. This just represents a smaller fraction of the total iPhone users worldwide.  

As the savings account cannot exceed US$250,000, as per the Federal Deposit Insurance Corporation’s insurance limit, it means that users are depositing several thousands of dollars into their Apple savings account, on average. The growth in account opening and deposits could also be driven by the fact that the daily cash rewards are getting deposited into the savings account automatically and not to the Apple cash prepaid cards.

With the convenience and brand trust that Apple has to offer to its users, these numbers are just a starting point for the tech giant in the banking sector and there is a lot of headroom for growth over the next few years. Furthermore, the collapse of conventional banking firms one after the other in the United States means that more Apple Card users will adopt the high-yield savings account service in the short term.

The massive scale that Apple has to its side, coupled with its growing presence in the financial sector, is something that regional and smaller banks in the United States will see as a threat to their existence from the medium to long-term perspective. Big names, like J.P.  Morgan, have already called Apple one of their biggest competitors in the financial services space in the United States.

Over the last few years, Apple has been consistently making big strides in the financial services market. In March 2023, Apple also officially launched its Pay Later service, a buy now pay later product for users in the United States. The launch of the BNPL service is also well-timed as the demand for flexible payment continues to grow among consumers in the North American market. With its foray into the BNPL segment, Apple is expected to give stiff competition to leading players such as Klarna, Affirm, and Afterpay in the United States. Going forward, PayNXT360 expects Apple to further launch innovative and competitive banking products, as the tech giant continues to march its way towards becoming the largest bank without actually being a bank.

To know more and gain a deeper understanding of the prepaid card market in the United States, click here.