Cupertino Savings

It's no secret that Apple is making many inroads in the financial sector. I would guess it's a lucrative place for them to focus now that services are fully established for the company. Apple Card allows Apple to save money in transaction fees. Now they're able to provide another service to let people keep money with them: savings accounts. And the draw to entice people? A killer interest rate. More from Ashley Capoot at CNBC:

Apple on Monday launched its Apple Card savings account with a 4.15% annual percentage yield. It requires no minimum deposit or balance, Apple said, and users can set up an account from the Wallet app on their iPhones.

The company said in a press release that all Daily Cash rewards earned through the Apple Card will automatically be deposited to the savings account. Daily Cash is the Apple Card reward program that offers up to 3% back on purchases. Users can change where their Daily Cash is deposited at any time, and can also add funds from their bank account to build on their earnings.

Apple is launching the savings account through Goldman Sachs.

The national average APY on savings accounts is just 0.35%, according to the Federal Deposit Insurance Corporation,


It's an identical playbook to what Ally does with high-yield savings accounts. Apple, however, has come out of the gate with a higher rate. To my knowledge, this is one of the highest rates out there. But there's another piece to this puzzle piggybacking the announcement.

Apple is also getting into the Buy Now, Pay Later racket. Taking on the likes of Affirm and Klarna, Apple now offers Apple Pay Later. The simple concept is taking your purchase, dividing it across 4 equal payments, and giving you something like six weeks to make those payments.

How does Apple have the money to front to merchants/loan to users in order to facilitate that system? You guessed it: money in savings accounts. This is the exact model banks use and simply cut depositors in on the fees they collect on those loans.

What fascinates me the most is Apple is one of the few, if any, companies that could do this and make it a profitable venture. Apple Card is not a "store card" and is no different than say a BestBuy + Citi partnership Visa card. What makes it "better"? Apple puts its UX and "no fees ever" pieces into it. But as a card, it's crappy with rewards.

Aside from 3% cashback from Apple or 2% everywhere you use Tap To Pay, you get nothing. Almost every other card out there is better to use. Personally, I only use my Apple Card for subscriptions or Apple purchases. It has zero advantage over any other card. Discover rotates 5% cashback throughout the year, airline cards give you points or miles, and the aforementioned BestBuy card gives you points to redeem as gift certificates for anything you want in the store. Apple Card, as a card, kinda sucks.

Simply on the interchange fees alone, Apple is able to make enough of a profit on this to build and maintain an entire system to facilitate a financial arm of the company. Even when cutting people like me in on it with their Daily Cash system and a high 4.15% interest rate for keeping that cash in their savings account, Apple still comes out ahead. It will be real interesting to see how the numbers play out once a few quarters have passed so we can gauge the volume of money people put in and take out of this new system.