Apple’s High-Yield Savings Account: A Genius Move with One Important Catch
Apple, known for producing top-notch hardware and software, has made a surprising move by offering a high-yield savings account. While the company’s services division has been profitable, it’s only recently that Apple has entered the financial sector. About four years ago, the company launched Apple Card in partnership with Goldman Sachs, and last month it introduced Apple Pay Later, allowing customers to pay for purchases up to $1,000 over six weeks. With Apple’s savings account, you can earn 4.15 percent on your parked cash, a higher rate than most traditional banks offer. If you use your Apple Card with Apple Pay to buy an iPhone, you can earn three percent cash back on the purchase, which will then be deposited into your Apple Card Savings Account and earn interest at 4.15 percent.
This offer may sound great, but there’s a catch: you can only get an Apple Savings account if you have an iPhone and an Apple Card, which requires good credit. Your cash back from using the credit card will automatically go into your Savings account, unless you change it. You can only spend the money in your Savings account by transferring it to an outside checking account or Apple Cash balance. Apple is not a bank, but they’re making moves to take over bank-like activities. They offer a credit card, short-term loans, and even interest on savings accounts through Goldman Sachs’ Salt Lake City Branch. Many people trust Apple more than traditional banks, especially given recent bank failures like Silicon Valley Bank.
Apple’s recent announcement to offer a Savings account linked to your Apple Card may seem like a smart move, and for good reason. By providing an additional service attached to the iPhone, Apple is increasing the likelihood that customers will continue using their products.
Previously, cashback from the Apple Card was stored in a virtual wallet called Apple Cash, managed by Green Dot, a bank. Now, by automatically transferring this money to a savings account, Apple (via Goldman Sachs) can invest or loan out the funds at a higher interest rate, potentially earning revenue.
Even if Apple doesn’t make a profit, the Savings account helps expand their ecosystem and create customer loyalty. The iPhone is already integral to our daily lives for work, communication, shopping, and more. Now, it can also be where we store our savings.
Overall, Apple’s Savings account is a natural extension of their existing services and strategy to make the iPhone indispensable to their customers.
By Mr. WWK