Apple’s new financial savings account ranks among the many prime rates of interest at 4.15%

A person exits the Apple Store in Annapolis, Maryland on February 2, 2023.

Jim Watson | AFP | Getty Images

As the Federal Reserve continues to raise interest rates, some online banks have struggled to offer the highest returns on savings.

Now Apple has entered the competition with a new savings account offering 4.15% interest.

The new offering expands the tech giant’s lineup of other financial offerings, including Apple Pay, Apple Card and the recent debut of a buy-now, pay-later service, said Ted Rossman, senior industry analyst at Bankrate.

“They’re trying to get ‘top of mind, top of wallet’ status,” Rossman said.

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Savings interest rates of 4% and more were unthinkable just a year ago, he noted.

But that was before the Federal Reserve launched a series of rate hikes to curb historically high inflation. While these hikes have resulted in higher debt rates on everything from credit cards to mortgages, they’ve also sweetened the incentive for savers, who can now make more of their money.

How Apple’s Savings Account Yield Is Developing

According to Rossman, the top savings returns in the Bankrate database are now over 5%. This includes UFB Direct, which offers 5.02%.

Apple’s Savings Account, at 4.15%, now ranks 11th in Bankrate, he said.

Still, Apple’s brand awareness could give it an edge when it comes to top plan deals, Rossman said.

“At Bankrate, we’re typically fans of anything that gets people to save more and make better returns,” Rossman said. “This is definitely a big, important and popular company to enter this space.”

The savings account provides a “seamless factor” for Apple enthusiasts who already use the company’s phone, credit card or “buy now, pay later” service, he said.

The savings account is meant to be a sidecar of the Apple Card, so daily cashback earnings are deposited there, Rossman noted. External funds can also be transferred to the savings account.

Importantly, the Apple Savings Account is offered through Goldman Sachs and the funds are insured by the FDIC, or Federal Deposit Insurance Corporation. That means its accounts are generally federally insured for up to $250,000 per depositor. Experts have stressed that FDIC coverage should be high on savers’ wish lists given the recent collapses of Silicon Valley Bank and Signature Bank.

Goldman Sachs has its own high-yield accounts through Marcus, which currently offer a 3.9% interest rate.

“Best incentive to look around in years”

Even though interest rates on savings deposits have skyrocketed, savers are largely not benefiting from the higher returns now available, Bankrate research has found.

A recent survey by the site found that only 22% of savers earn interest rates of 3% or more on their cash.

Savers with accounts at large brick-and-mortar banks are likely to make “almost nothing,” Rossman said. Many people could probably get a much better return by switching banks, he said.

“It’s definitely got the best incentive to look around in years,” Rossman said.

However, many people find it difficult to find extra cash when rising interest rates have made paying off debt more expensive and inflation has pushed up the prices of everyday items.

For those struggling with saving, personal finance expert Suze Orman recently told CNBC that automating their savings helps. By putting money aside before you see it on your paycheck, “you’ll find you don’t miss it,” Orman said.

One thing to note is that today’s high interest rates aren’t guaranteed to last, Rossman noted.

Yields on savings accounts could fall if the Federal Reserve decides to cut interest rates at some point. Other products, including certificates of deposit or CDs, could allow savers to lock in interest rates for longer periods, say one to five years, he said.

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