Apple has entered the retail banking game, offering Apple Card holders a high-yield savings account with an annual interest rate significantly higher than the national average.
In partnership with Goldman Sachs, the tech behemoth’s new financial product comes with a 4.15% APY and serves as a repository for the cash-back bonuses Apple Card customers wrack up using their credit cards. The feature went live on Monday.
“Our goal is to build tools that help users lead healthier financial lives, and building Savings into Apple Card in Wallet enables them to spend, send, and save Daily Cash directly and seamlessly — all from one place,” said Apple executive Jennifer Bailey, vice president of Apple Pay and Apple Wallet, per a press release.
Apple announced the savings account product last October but did not disclose the annual interest rate. It comes with no fees or minimum balance requirements. However, it has a maximum balance limit of $250,000, the largest amount insured by the Federal Deposit Insurance Corporation, TechCrunch reported.
While it might seem that the tech giant is testing the waters in the banking sector, some experts believe it is simply trying to further develop a sense of brand loyalty and comprehensive services.
“Apple is creating this flywheel effect, an ecosystem of Apple cash,” said Bankrate senior industry analyst Ted Rossman, speaking with CNN.
“It’s very much a loyalty play because it’s a multi-level process: To get the Apple credit card you need the phone, and to get the savings account you need the credit card. This isn’t typical — if you go with American Express, you can get a credit card without opening a bank account,” Rossman said.
A similar sentiment was expressed by Yiming Ma, assistant professor of finance at Columbia University, who saw the combination of a high-interest rate and brand recognition as an attractive proposition to consumers.
“I think what is special in this case is Apple is Apple. Everyone knows what Apple is, and many people already have an Apple Card,” Ma told The Wall Street Journal.
Still, it is unclear whether such a move can shore up the company’s somewhat stagnant stock price ahead of its upcoming earnings report in early May.
Apple is entering that territory of too big to fail. I do not understand how the Feds can break up AT&T but let companies like Apple, Facebook, Microsoft and Disney to gobble up all their competitiors.