You may have recently heard that Apple, yes the tech company, now offers a savings account to their customers which yields a 4.15% APY (annual percentage yield). There’s been a lot of talk surrounding this. Is it too good to be true? What’s the catch? Can you trust a tech company with your savings? Let’s take a closer look.

What does Apple’s savings account offer?

The Apple Savings Account offers 4.15% APY as of this article’s release. However, it is only available to Apple Card holders. Therefore, to get an Apple Savings Account you must first have an Apple Credit Card. The account also has no monthly fee or minimum balance required. Please note that it is for a single individual at this time. So if you share an Apple Card with your family, each member would have the option for their own savings account.

Can you trust Apple with your savings?

First off, Apple is a very reputable company that has decades of customer satisfaction on its side, so the trust level is already high with the average user. According to a 2022 report, nearly 50% of smartphone users in the United States have an iPhone. The $2.7 trillion valued tech giant certainly has the finances to offer a savings account, however, they are not a financial institution. So how are they offering it?

You may have heard of the Apple Card; it is Apple’s credit card they offer their users which can boast as high as 3% daily cashback. Apple Card is issued and provided by Goldman Sachs Bank, Member FDIC. This is the same bank Apple has partnered with for the savings account. So technically, your savings account is with Goldman Sachs Bank, you’re just interfacing through Apple’s brand, devices, and software.

The savings account is backed by the expected $250,000 FDIC insurance and in fact, has a limit that won’t allow your account to surpass that. So, to summarize, yes Apple Savings is as trustworthy as any savings account.

What’s the catch?

A savings account that can yield almost ten times the national average, is there a catch? Yes and no. It goes without saying you’ll need to have either an iPhone or iPad on the latest software OS available. After that, the big catch is that you must have an Apple Card to access Apple Savings. For those who already have an Apple Card, Savings may be a great addition to growing their wealth. In fact, you can set your daily cashback to go straight to your savings account.

For others who do not have the Apple Card, this would require getting another credit card. That means, if approved, a hard credit check which will temporarily lower your credit score a few points. If you are seeking another loan, mortgage, etc. then that may not be something you want to do.

Another thing to remember is that a credit card is borrowed money. So having another one is another way you can find yourself in debt if unable to pay your monthly balance due. Remember to be smart with your wallet, the goal of this savings account is to grow your wealth. If an extra credit card would be too tempting or you’re already in debt, maybe this isn’t for you right now.

Why is Apple offering this?

Apple is a for-profit business, so how does this help them? Apple makes money when someone uses Apply Pay – the tech giant’s NFC payment option for their users. About 0.15% per transaction to be precise (which is estimated to make the company $4 billion this year alone). They also financially benefit from users having an Apple Card. So if you have Apple Savings, then it is safe to say that you will have an Apple Card and be using Apple Pay. Those are two key benefits Apple receives by offering you Apple Savings.

How does it work?

Apple Savings is accessed in the Wallet app on any iPhone or iPad that is signed into your Apple ID. You can view Savings inside your Apple Card on the app. You can transfer directly from your bank to and from your Apple Savings and at any time you can cancel it by calling an Apple Savings Account Specialist (be sure to transfer your funds first).

According to the NerdWallet savings calculator, an account with a $5000 deposit will earn $211 in interest after one year. It’s easy to see how that can compound over time, especially with larger values. At this APY rate, the yield will be similar to many financial plans with stocks. The key differences are Apple Savings has no risk of losing money but it also has a ceiling amount of $250,000… so maybe don’t sell all that stock quite yet.

Conclusion

In conclusion, Apple Savings is legit and backed by the FDIC. If you have an Apple Card or are planning to get one, then this savings account may make sense for you. If you don’t or don’t want another line of credit, then you’ll want to pass on this offer.

To discuss tax and financial planning further, give our office a call at (402) 932-8815. We’re here to help.

Sincerely,

W.E. Stevens PC