Hello there! With Apple‘s recent launch of a high-yield savings account, you may be wondering if it‘s worth opening or if you should skip it. Those are great questions – let‘s explore them!
In this post, I‘ll provide an overview of Apple‘s account, then detail 5 compelling reasons why you may want to skip it:
- Requires an Apple credit card
- Watch out for high interest rates
- Restrictions on balance transfers
- No signup bonuses
- Accessing cash can be difficult
I‘ll also suggest a few alternative places to open high-yield savings instead.
My goal is to arm you with enough insider knowledge to decide if Apple‘s account fits your needs or if your money would be better parked elsewhere. Let‘s get started!
Overview of Apple‘s Savings Account
In April 2023, Apple introduced a savings account offering 4.15% APY interest rates. That sounds fantastic compared to the national average of 0.4% APY for standard savings accounts.^1
However, to open an Apple savings account, you must:
- Own an iPhone
- Run iOS 16.4+
- Open an Apple credit card
- Manage everything via Apple‘s Wallet app
The account has proven incredibly popular, amassing over $10 billion in deposits by August.^2 Yet behind the scenes, the bank partner (Goldman Sachs) has reportedly lost over $1 billion on the product.^3
Now, high interest and losses might sound like a consumer win. But key account restrictions can turn the tables and make Apple‘s option much less appetizing.
[^1]: Federal Deposit Insurance Corporation, 2022[^2]: Armental, August 2023
[^3]: Wakabayashi, July 2023
1. The Apple Credit Card Requirement
To access one of Apple‘s savings accounts, you must open an Apple credit card. That card carries a variable 15.74% – 26.75% APR interest rate if you carry a balance.^4
For comparison, the average credit card interest rate is 19.14%.^5
That means your Apple card interest could exceed the savings account APY by 4-6.5 times if you don‘t pay off your balance every month!
Table: Apple Card Interest VS Savings APY
| Account | Interest Rate |
|---|---|
| Apple Savings | 4.15% APY |
| Apple Credit Card | 15.74% – 26.75% APR |
This can quickly negate (or exceed) any interest you might earn from the savings product itself. So if you routinely carry credit card balances, Apple‘s offer becomes far less attractive.
[^4]: Apple, 2023[^5]: LendingTree, August 2023
2. Balance Transfers Are Restricted
If you do accumulate Apple credit card debt, transferring it to a lower interest card can save money.
Unfortunately, fine print indicates balance transfers may not be allowed to/from an Apple card.^6 Terms cite vague "non-conforming payment" rules that provide little clarity or guarantees around moves between accounts.
So if you require balance transfers for debt relief, Apple‘s restrictions could cost you.
[^6]: Apple, 20233. No Lucrative Signup Perks
Opening a new credit card often scores you signup perks like cashback or travel miles. But the Apple card offers zero bonuses – forgoing rewards worth $100s.
For example, alternatives like Chase Freedom Unlimited offer $300 cash perks and Capital One Venture, 75,000 travel miles.^7
Table: Signup bonus examples
| Credit Card | Bonus | Value |
|---|---|---|
| Chase Freedom Unlimited | $300 cash | $300 |
| Capital One Venture | 75,000 miles | ~$750-$1,875 |
| Apple Card | None | $0 |
So if you want high-value signup freebies, Apple will leave you empty-handed.
[^7]: CNBC, July 20234. Mixed Reviews on Cashback
The Apple Credit Card provides unlimited 3% daily cashback on Apple products/services and select merchants.^8
However, financial experts note restrictions make payouts smaller than they first appear. With $5,000 in qualified yearly purchases, you‘d earn only $150 back. Analysis shows competitors return much more.^9
Table: Estimated Yearly Cashback
| Card | Rate | Qualified Spending | Cashback |
|---|---|---|---|
| Apple Card | 3% | $5,000 | $150 |
| Chase Freedom Unlimited | 1.5% – 5% | $30,000 | $450-$1,500 |
So while 3% looks high, actual savings could be small. Review your spending to see if Apple‘s restrictions are problematic.
[^8]: Apple, 2023[^9]: CNBC, July 2023
5. Withdrawing Cash Can Take Longer
Apple‘s savings lives as digital-only dollars inside your iPhone. Getting paper currency means transfers to/from an external bank account.
And while digital transactions occur in minutes, withdrawals take 1-3 days.^10 That‘s slower than direct ATM access other banks provide.
So if you need regular cash or fast emergency money, Apple‘s solution might not be the most convenient. Traditional banks with local branches could better suit your liquidity requirements.
[^10]: Apple, 2023Alternatives To Consider
If you‘re turned off by Apple‘s savings account restrictions, plenty of alternatives exist with better rates and perks. Here are a few to consider exploring further:
- Popular Direct – 5.23% APY^11
- UFB Direct – 5.06% APY, ATM card^12
- Laurel Road – 5% APY, no minimum^13
[^12]: UFB Direct, 2023
[^13]: Laurel Road, 2023
And there you have it! I walked through 5 reasons why opening one of Apple‘s new high-yield savings accounts may not be in your best financial interest. From credit risks to cashflow limits, the drawbacks are real.
I hope reviewing the pros and cons gives you great clarity about what move is right for your money. Let me know if you have any other questions!
