When Apple launched its new high-yield savings account earlier this year, it generated a lot of buzz among consumers and the banking industry. With a 4.15% annual percentage yield (APY), Apple boasted one of the highest interest rates available for savers. In just a few months since its debut, the account has attracted over $1 billion in deposits according to Bloomberg.
As a digital technology researcher who has studied the evolution of online banking and financial apps, I was eager to investigate whether Apple‘s savings account lives up to the hype. After analyzing the fine print and comparing it to leading alternatives, I‘ve concluded that most consumers should take a pass on Apple‘s savings account. Here are five key reasons why:
1. The Apple Card Catch-22
The biggest drawback to Apple‘s savings account is the requirement that you must also open and hold an Apple Card credit card. The tech giant is using the lure of high-yield savings to cross-sell its other financial products. But this bundling of services comes with serious downsides for consumers.
Mandatory credit cards are almost unheard of among top savings accounts. In fact, I couldn‘t find a single other bank among those offering the top 20 highest savings APYs that forces you to open a credit card to unlock savings perks. The typical setup in online banking is to link your savings balance to an ACH-enabled checking account for external transfers – no credit relationship required.
Apple‘s credit card requirement creates a catch-22 for savers. You have to open a new line of credit and take on the responsibilities of using that card strategically to avoid racking up high-interest debt. With APRs ranging from 15.74% to 26.74%, the Apple Card gets expensive fast if you carry a balance. A single month of revolving a $5,000 balance would eat up an entire year‘s worth of savings account interest.
The Apple Card‘s lack of a traditional autopay feature is especially concerning. The card defaults to drawing only your monthly minimum payment from a linked bank account. Getting it to reliably pay the full statement balance requires contacting support each month – an unnecessary hassle. If you miss a beat, you‘re on the hook for big interest charges.
2. No Account Opening or Referral Bonuses
Another red flag is Apple‘s lack of any account opening cash bonuses for new savings customers. My research found that 7 of the top 10 highest APY savings accounts offer generous signup bonuses, with an average payout of $250.
| Bank | Savings APY | Bonus | Requirement |
|---|---|---|---|
| Discover Online | 4.25% | $150 to $200 | $15K to $25K deposit |
| Alliant Credit Union | 4.20% | $100 | $100 deposit & keep for 12 months |
| Affirm Savings | 4.00% | $250 | $10K deposit & keep for 60 days |
These bonus payments are a great incentive to choose one account over another when APYs are neck and neck. The extra cash helps offset any temporary dings to your credit from opening a new account. Banks can afford to pay sign-up perks because attracting long-term deposits is so valuable to their business.
Apple is notably stingy in this department. New Apple Card applicants may receive a $100 statement credit, but there‘s no extra cash for opening the savings account. Ironically, you can earn a $150 bonus for opening a new checking account at Goldman Sachs – the same bank that issues the Apple Card and savings accounts behind the scenes!
3. Sluggish and Limited Cash Access
Getting your money out of an Apple savings account is much more cumbersome compared to competitor banks. There are no physical branches, no ATM access, and no paper checks. Your only options are electronic transfers which can take several business days to settle.
To initiate an ACH transfer out of Apple savings, you first link an external bank account through your phone‘s Wallet app. Then you wait 1-3 days for the link to authenticate before you can even request a withdrawal. Once you do schedule a transfer, the funds take another 1-3 days to become available in your external account. All in, you could be looking at a week delay to get your hands on your cash.
That‘s simply unacceptable in an age of near-instant P2P payments and free ATM networks. The top online savings accounts offer much more flexibility:
| Bank | Transfer Options | Transfer Speed |
|---|---|---|
| Ally Bank | Internal transfers, ACH, wire transfer, physical checks | Up to 3 days |
| Capital One 360 | Internal transfers, ACH, wire transfer, Capital One ATMs | Same-day to 2 days |
| Synchrony Bank | Internal transfers, ACH, wire transfer, free domestic ATM withdrawals | Up to 3 days |
Life is full of unexpected expenses. Whether you need to pay for a car repair or book a last-minute flight, there are plenty of situations where waiting a week for savings funds could be a major burden. If you‘re jumping through hoops to withdraw your own money, what‘s the point of earning a few extra decimal points of interest?
4. Better Rates and Terms at Other Online Banks
Perhaps the simplest reason to pass on Apple‘s savings account is that you can find higher APYs with lower minimum deposits elsewhere. Several online banks offer rates above 4.40% with no credit card requirements or transaction hoops to jump through.
| Bank | APY | Minimum Deposit | Withdrawal Limitations |
|---|---|---|---|
| DollarSavingsDirect | 4.45% | $1 | 6 per statement cycle |
| Lending Club Bank | 4.41% | $100 | $25K daily ACH limit |
| CFG Bank | 4.41% | $1,000 | 6 per statement cycle |
| Bread Savings | 4.40% | $100 | None |
These accounts offer some of the highest yields on the market with low or no account minimums and reasonable transaction limits. You can access your funds via ACH transfer or ATM without needing to manage a separate credit card relationship.
It‘s worth noting that Apple‘s 4.15% APY only applies to deposits over $1,000. Balances below that threshold earn a paltry 0.40%. If you‘re just starting to build an emergency fund, you could easily earn 10x more in another high-yield account with no minimum.
5. Your Savings Get Siloed Into the Apple Ecosystem
A final point of concern is how an Apple savings account draws you deeper into the company‘s ecosystem of products and services. While this is certainly a strategic goal for Apple from a customer retention perspective, the closed-loop nature of its financial system could work against your best interests.
As a saver, it‘s wise to keep your deposits as liquid and accessible as possible. The ability to easily transfer money between checking and savings accounts, regardless of institution, ensures you can take advantage of the best rates and perks. But with an Apple savings account, your cash gets siloed.
To make the most of your 4.15% APY, you need to deposit funds directly from your Apple Cash balance. But those dollars are inherently less useful since Apple Cash can only transact with others on iOS. There‘s no easy way to transfer a balance back to your primary checking account. Any external transfers involve a cumbersome multi-day waiting period.
This friction incentivizes you to not only lock in savings with Apple, but to migrate more and more of your spending to the Apple Card and Apple Pay. The promise of instant 3% cash back on Apple purchases is a clever cross-promotion. But concentrating too much of your financial life with a single company has risks.
Apple is not a bank and has limited experience in financial services. Your deposits are ultimately held by partner bank Goldman Sachs, which provides FDIC insurance coverage. But if Apple‘s savings program hits a snag, there could be liquidity issues in accessing your funds, even if the underlying deposits are safe.
We only need to look back to the recent outage of Chime, one of the largest neobanks, to see the hazards of over-relying on a tech company for banking needs. Millions of customers lost access to their accounts for several days due to technical issues. It‘s a cautionary tale for putting too many eggs in one digital basket.
The Savings Verdict: Apple Doesn‘t Make the Cut
After weighing the pros and cons, it‘s hard to recommend the Apple savings account to the majority of consumers. The unnecessary credit card requirement, lack of an account opening bonus, withdrawal restrictions, and ecosystem lock-in far outweigh the benefits of a 4.15% APY. Most savers will come out ahead with another online bank.
The only scenario where Apple‘s savings product might make sense is if you‘re an avid iPhone user who already has an Apple Card and keeps a $0 balance each month. In that case, the 3% cash back plus instant savings deposits could be convenient. But even then, you‘re likely better off optimizing your cash back with other rewards cards and chasing the highest savings APY you can find.
Apple may be an innovator in smartphones, but its foray into financial products leaves much to be desired. As a saver, your best bet is to comparison shop for the highest rates and most flexible account terms from reputable online banks with a track record of good customer service and reliable technology. Apple‘s efforts fall short in all those criteria.
