Apple’s savings account: High yield, higher risks?

Apple recently launched a new savings account in partnership with Goldman Sachs. Within four days of opening, the account reportedly brought in nearly $1 million in deposits, Forbes reported. Not only does Apple have undeniable brand recognition on its side contributing to its blockbuster popularity, the account also boasts an impressive annual percentage yield, or APY, that’s well above the current average.

Is the new Apple savings account worth adding to your banking lineup?  

What does Apple’s new savings account offer?

The account offers an impressive APY of 4.15%, as of the time of writing. However, the savings account is only available to Apple Card holders.

If you are a cardholder, then the Apple savings account “automatically collects the Daily Cash earned by the Apple Card,” which “could help the amount you earn grow on its own without needing to transfer points or money from a similar cashback card,” CNBC explained. (Daily Cash is the reward offered by the Apple Card, and cardholders can earn up to 3% back on purchases made with the card.)

Interest on the account compounds daily, and it gets credited to your account on a monthly basis. Plus, there are no minimum balance requirements or monthly fees associated with the Apple Savings account.

Funds in the account are FDIC-insured, up to the typical $250,000 per depositor per ownership category at each insured bank. Apple Savings also limits account balances to a maximum of $250,000. “If you try to deposit more than that amount, the bank may reject your deposit,” according to Nerdwallet.

Account holders can access their accounts through the Apple Wallet app. Once they’ve set up their account, they can “access a savings dashboard where account balances and interest can be tracked and funds can be withdrawn or transferred to a linked bank account with no fees,” MarketWatch noted.

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Are there any risks or downsides to the Apple savings account?

Yes. To access the Apple Savings account, you’ll need to have an Apple Card. While for existing cardholders that might not be a big deal, those considering applying for a credit card just to access Apple’s savings account will want to consider the implications. When you apply for a new line of credit, a hard credit check is required, which will cause your credit score to drop temporarily by a few points. If you’re hoping to secure another lending opportunity, such as a mortgage, then opening a new credit card could work against you. There are also risks inherent to credit cards, such as falling into a debt cycle if you aren’t able to pay off your balance in full each month and racking up interest charges at a steep rate.

Plus, “stashing money for big purchases or with the same app used to buy things each day could prove a little too convenient, tempting users to spend instead of save,” The Wall Street Journal said. It could also make it easier to turn to your savings to pay off debt, when you should be turning to your checking account for that instead.

It’s also worth noting that there are “risks that come with having so much of your personal and financial information with one company,” according to Bloomberg. “No one enjoys a lost or stolen iPhone, and turning your phone into your de facto bank could create more headaches if someone were to lose their phone, have it stolen or have their Apple ID hacked,” Elliot Pepper, financial planner and director of tax at Northbrook Financial, told Bloomberg.

And while the high APY of Apple Savings is likely a top selling point for most, it’s a rate that still “isn’t currently keeping up with the higher prices of everyday goods,” Bloomberg added. If you’re hoping to earn enough to “beat long-term inflation,” then one of the best options remains investing in the stock market, Karen Ogden, partner at Envest Asset Management, told the publication

Keep in mind that you’ll owe taxes on any interest that you do earn, “even if you don’t take the money out,” Bloomberg explained. On the other hand, you won’t owe taxes on investments until you sell them.

How does the Apple account compare to other savings accounts?

Before opening up an Apple savings account — or any bank account, for that matter — it’s smart to do some comparison shopping. After all, Apple Savings isn’t the only savings account paying a high APY. “There are many other online savings accounts that pay the same and higher rates,” Ken Tumin, founder and editor of DepositAccounts.com, told MarketWatch.

Many of the savings accounts that offer comparable or better APYs than Apple Savings “have minimum balance requirements, minimum daily balance requirements and other nuanced fine print items like setting up recurring transfers, opening a brokerage account and checking your balance online monthly,” said MarketWatch. 

In other words, you’ll want to do your research carefully on all of the finer points — think interest rates, accessibility, and fees — before banking on any one account.

Is the new Apple savings account worth it? 

If you already have an Apple Card, then the Apple savings account could make sense. “While there are other high yielding savings accounts out there, to the brand loyal Apple consumer, this might be the account that gets them to save, or save more consistently, than they have in the past,” Greg McBride, chief financial analyst at Bankrate, told MarketWatch. Indeed, “streamlining and simplifying your financial life is almost always a good thing,” Brent Weiss, CFP, head of financial wellness at Facet, told MarketWatch.

However, if you’re simply chasing the highest APY, then “you have plenty of other options to earn a high interest rate with another account,” CNBC concluded. Those who don’t currently have an Apple Card might consider other options.

Before opening a bank account (or a credit card), think carefully about your own needs and priorities, then assess which option will best meet those. You don’t necessarily need to have just one bank account that checks all of your boxes — “households can employ savings accounts with more than one bank to save for different goals,” McBride told to MarketWatch.

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She has previously served as the managing editor for investing and savings content at LendingTree, an editor at SmartAsset and a staff writer for The Week. 

Apple recently launched a new savings account in partnership with Goldman Sachs. Within four days of opening, the account reportedly brought in nearly $1 million in deposits, Forbes reported. Not only does Apple have undeniable brand recognition on its side contributing to its blockbuster popularity, the account also boasts an impressive annual percentage yield, or…

Apple recently launched a new savings account in partnership with Goldman Sachs. Within four days of opening, the account reportedly brought in nearly $1 million in deposits, Forbes reported. Not only does Apple have undeniable brand recognition on its side contributing to its blockbuster popularity, the account also boasts an impressive annual percentage yield, or…