While the point remains that Apple Card’s rewards are inferior, I find that almost everywhere except Home Depot/Walmart/Lowes/Kroger/Winco accepts Apple Pay.
I got hooked on Apple Card when my other Visa got suddenly suspended after I made a legit purchase abroad, and I was in a store and I had the Apple Card up and running in less than 1 minute on my iPhone. Really changed my perception of how the credit card experience should work.
That was what originally interested me, except I’ve learned that the vast majority of places I frequent don’t allow touchless payments. I’m at Home Depot nearly daily and I really wished they allowed touchless payments.
Home Depot in my area (Seattle) has rolled out touchless/apple pay. They’re not like walmart wherein they were purposefully holding out, they’re just slow
I like tinking it against the table. I got one for the 3% back and financing on Apple products. Kept it for the tink tink noises and for the physical card having absolutely no info on it to steal (and a rotating CCV number)
Disruptive? It's a bog standard savings account with Apple's terrible Wallet interface. It's convenient if you have and actually use an Apple Card I guess. I personally only use my Apple card for Apple purchases because that's the only place you actually get a good rate, and I just use other cards with better cash back on everything else.
That's not an apples to apples comparison. It's more like people shafting themselves for not evaluating the space of money market savings accounts. You can stay with the same bank and go from a 0.01% rate to 4%+.
Not intentionally, but it is. What Apple is offering is a financial ecosystem for families, particular for parents helping their kids manage money. Apple ecosystem is quickly becoming the one-stop shop for managing all things family
Interested in this as well, because I've been doing research on this and it seems like the ones that aren't banks you've heard of that have higher yields are more prone to playing games with your account (not adjusting your APR but instead keeping you on whatever and creating new accounts for the new plans).
Yeah a lot of the high yield savings accounts feel gamified where it suddenly feels a hell of a lot less simple than "savings account". More "high yield if ... <moving target>".
It is interesting that there is no direct deposit requirement for this account. Most traditional (Truist, BofA) and competitor banks (Sofi) offer incentives to encourage direct deposit for the end users. I wonder what other strategies Apple will be using to drive deposits in lieu of this.
It is also in Apple's best interest to drive deposits, as most of these agreements end up with the bank (GS) and the provider (Apple) splitting the interest earned. Even if they are currently passing most of the interest to the customer for now, they will want to build up deposits as high as possible so they can lower rates in the future and print money.
Yeah was curious about this too. From the article:
> Starting today, Apple Card users can choose to grow their Daily Cash rewards with a Savings account from Goldman Sachs, which offers a high-yield APY of 4.15 percent
Meanwhile, Marcus by Goldman Sachs just bumped their APY to 3.9%.
I feel somewhat confused; my current Wells Fargo saving account APY is 0.01% where did I go wrong? Seems like I might be shifting my money to a new home.
Edit: In the very least it will educate many uninformed folks like myself they are getting shafted at their current banks.
Double edit: Thank you for all the helpful links and information!
Either because banks don't lend out consumer money, or they do and don't pay the interest back to their savings account customers, tons of regular consumer banks and CUs offer 0.01% on savings accounts they bundle with checking.
Park 250k in there and you're getting over $950 a month right now. Spread those chunks around multiple banks, assuming you have those chunks, and you'll have a decent modest income while these rates last.
And yes, I'm doing exactly this and no, I don't have a day job right now and yes, my overall holdings are still going up. This is an unusually good time to be holding cash.
Also I know the trivial inflation arguments about how I'm hypothetically losing purchasing power. But again I don't need hypothetical things to be bought, just mine.
Right now it's covering my bills and the number is still rising. This strategy is subject to change without notice.
Bank accounts are one of the lowest "customer churn" services out there. People typically open a bank account and use it for years and years (which turns into decades on decades).
Until someone like Apple comes in with a one click UX to open a bank account and set everything up, existing banks have no incentive to make existing clients happier because they're extremely unlikely to move banks (or even to open a better yielding type of account)
One click setup isn't going to do it. If Apple is providing banking-type services, they're going to need to have support available at the Apple Store. If they don't, banks will beat them every time. Customer support for noney is not something that can be left to a chat window.
Having trouble squaring that with Wise, Revolut, Monzo, Starling, etc. I also don’t think I’ve ever visited Barclays — where I have my primary UK current account — in person ever, other than setting up the account ~10 years ago
Monzo is the only one in the list that has a banking license, i.e. legal right to take deposits and make loans. Not everyone is a digital native, even today. So when it comes to money matters, there will be a time when interacting with a virtual assistant is not going to do.
I don't visit my bank either in most cases. However, I can if I need to. That's a different kind of peace of mind compared to a e-bank that has no customer-facing physical location.
My bank, Capital One, is a glorified cafe and co-working space. If I try to do any "banking" there they will literally redirect me to use the app. You can definitely do banking completely online. You simply need to have the systems and employees in place to maintain or exceed expectations.
I stopped using BoA because the in branch experience has declined. I never used Wells Fargo for obvious reasons.
And everyone hates messing with payroll, even if your employer has a good system it's an opening for problems.
My previous employer had at least two different Ceridian installs, one was for W2s and the other was for regular payroll, they used different passwords, half the time they'd expire out by the time you logged in and you'd have to get HR to reset it, etc. And even if you want to go back and mess with it, when does it take effect? A lot of people don't have a cushion sitting in a bank account and can't afford to have a paycheck disappear and then spend a couple days pairing their credit card payment to the new bank account etc.
That's why you can get those $600 promos or whatever if you open a new checking account and turn on an auto-deposit. Most people will set it and leave it.
Banks capitalize (hah) on unsophisticated deposits to underpay them and profit from the spread. Check if your brokerage has a short dated government securities money market fund (Fidelity = SPAXX [1], Vanguard = VMFXX [2]). Not investing advice!
Many banks have high-yield savings accounts, but I think they use them to attract customers, so they don't automatically put you in them if you don't ask. That said, I just looked up wells fargo and I don't see any.
Capital One is paying 3.5% right now for "Performance Savings".
Note that these rates change in relation to the federal interest rates. You'll sign up for a great rate, and in 3 years it can go back down to a half percent
In general I would avoid Wells Fargo since they made up fake accounts for customers to charge them more money, got fined a billion dollars for it, and then did it again while they were still on probabtion from the first time.
Used to be a decent source until they started letting ads take over their content. In your link you have to get past the "Featured" section and "Offers from banks you may use" section to see the actual content. Many times I've needed an extra click to get past the ads, or been completely unable to.
The big banks are offering 0% on deposits while raking massive profits. They can do that because they’re too big to fail, so people put their money there anyway so it will be safe. They get enough deposits, so no need to offer better rates to attract more.
Meanwhile money market funds are yielding over 4%. Interactive brokers is offering over 4% and it’s insured to some ridiculous amount (standard 250k + extra coverage from Lloyds of London).
You can buy 3 month or 6 month treasuries with yields well over 4%.
I don’t know why anyone would want to keep cash in the big banks, unless they really need it liquid in the short term.
The larger banks simply can't offer high interest rates due to the amount of their deposits. For example, JP Morgan Chase has yearly net income of ~$50 billion. The size of their interest bearing deposits is 1.6 trillion. So every 1% rise in savings account rates costs them $16 billion a year.
Yes they do. Do you think a company is going to set themselves for a best case scenario of breaking even? Or just take a 25% hit to profit unless they absolutely need to?
I just look at Wells Faro, and they have $900 billion in interest bearing deposits. With NI of $16 billion, just going up to 1% will wipe out 55% of profit.
I don't think I articulated myself well, I wasn't taking a judgement. There is no logical inference that a company needs (or deserves) the profit margin it had last year, for example, that's just a fact of business.
My point was essentially to stay viable, the bank needs to have some profit margin. Here is a classic business choice between maintaining or improving profit margin, and maintaining or improving services.
So my point was they could obviously remaining viable while offering higher rates, they choose not to because it increases short term profit - if they think they are losing enough business to other banks with better rates, presumably they will start raising them to compete.
The fact that they can't really meet current federal rates and stay profitable is interesting, it suggests they have some pretty heavy cost centers to carry.
I have been getting >4% for most of this year on high yield savings accounts and also 1 month CDs. They are all zero risk(FDIC insured) and money generated from them could pay for my portion(half) of the mortgage on my house(if I lost my job). I would look for bankrate and they list which accounts are paying the highest APR, if you have a brokerage like schwab etc you can look at 1-3 month or even longer term CD's which have rates close to 5%.
You can't do it from the app, its only on the WEB UI. from there click "Trade" and it will be one of the options to select(in the middle column). Hope that helps.
Yeah, obnoxious huh? My main bank is always suggest I open a savings account with them. “Check out our new awesome rate!”
0.3%, or something similar.
I’ve been using different banks with real high yield for a long time. My current choice is almost 4% (after climbing a ton last year with all the hikes). A number of banks offer similar rates.
Some places are starting to offer non trivial rates on checking. I think AmEx may be paying over 1% interest on their checking accounts (I know, think it’s new) instead of the common 0.0005% if you’re lucky enough to get interest at all.
Sadly you have to shop around. Even credit unions often don’t offer good savings accounts, even if better than the big banks.
What I, and probably many of us want, is a way to keep just enough cash in a checking account at a too big to fail bank while the rest is earning yield at Betterment, Wealthfront, other 4% or more APR locations, automatically topping off the checking account as needed.
Credit unions are typically more competitive than big banks in general. If you truly want to make the most out of every penny then you should be unbundling your bank services (checking at CU A, savings at CU B, credit at X, etc.). This is especially easy with credit unions because they are typically part of a cooperative that streamlines inter-bank transfers (it usually takes < 24hr to transfer between my savings and checking).
There can be higher yield options for long-term savings (depending on market conditions at the time). The classical wisdom is to keep your money in CDs[1], but you're locking in an interest rate for <duration>, so if interest rates go up you could lose out.
If you're saving for more than a couple (1-3) of years you really should be looking at handing over some of your money to someone who profits when you profit (money market or brokerage). Remember that even at the current ~5% of CDs, the banks have ensured that they will be making a profit even during moderate market turmoil.
It's also not a bad idea to invest in something that is guaranteed to maintain value (such a gold or platinum), to hedge against recessions.
I definitely agree with un-bundling for the best services over all. The problem with credit unions are most are regional (though some are not). I have the best CU in my area which is fine, but it doesn't have a competitive credit card offering or savings rate. It does have good service and some good other benefits and I use it for my main checking account.
I don't agree CUs are more competitive always than big banks. I think for the most part big banks have better credit card offerings for example. There are lots of reasons someone would go for a big bank like Chase for credit cards.
> The problem with credit unions are most are regional
My CUs are west-coast, and I moved to the east coast last year. I haven't run into any problems. On the off-chance I had to walk into a brick-and-mortar bank (depositing cash is about the only reason I'd need to do that, so never), I could visit a coop instead.
> I don't agree CUs are more competitive always than big banks
Absolutely. We're on a mainstream brand miles reward card because my wife likes traveling. CC rewards at my CU were basically worthless - the rates were pretty competitive, though.
I just took a double-look at the Betterment high-yield savings account they'd offered to me previously (I already have an account there for investments), which I'd dismissed because it seemed convenient to keep my savings and checking in the same place (Chase), and it's 4.2%! I've been getting 0.01% at Chase!
Needless to say I'm going to be trying it out! Thanks Apple!
People who know more about this stuff than me: is there any reason not to just move over completely? Technically Betterment is not a bank, but it sounds like these cash accounts are backed by accounts at banks that Betterment manages for you, which means they're insured (and in fact, you can insure more than $250k because multiple banks are involved). Is there any downside I'm not seeing?
> is there any reason not to just move over completely? Technically Betterment is not a bank, but it sounds like these cash accounts are backed by accounts at banks
There is some small risk that if betterment folds, those funds aren’t protected. It’s afaik never been really tested in court. FDIC would protect only the underlying bank - not betterment. It’s a very small risk though. But a real bank doesn’t have that risk.
A lot of these small investment companies like betterment or wealth front are on pretty shaky financial grounds - so it could come up sooner than expected.
In their terms it sounded like if they close your account for whatever reason, you can still go directly to the banks and recover your funds. They did say the funds would be temporarily uninsured at certain points while in transit (deposit/withdrawal, redistribution, etc) but that seems like a relatively small risk
Is it possible they'd try to claim first-dibs on your funds that are living in other banks if they went under and had to pay back shareholders?
Typically when companies/banks do this sort of pass through banking, the money isn’t actually held in a personal account at the host bank. It’s usually held in one giant account that had a “managed on behalf of many” type structure. This is legal from an FDIC perspective, but it’s held in the not-banks name (aka betterment). So if betterment goes into debt, it’s a grey area if they could use that money.
They could also mismanage money during that “temp uninsured” period. Again, they’re not a bank so they don’t necessarily comply with banking regulations so you don’t know how long that period is or what’s happening.
There are real regulated entities (banks brokers credit unions etc) that offer good rates and less risk. I don’t know why you’d expose yourself to any risk for 0.x% APR. Even Goldman Sachs (the underlying bank of apple) lets you get a good interest rate on savings directly.
> Typically when companies/banks do this sort of pass through banking, the money isn’t actually held in a personal account at the host bank. It’s usually held in one giant account that had a “managed on behalf of many” type structure.
Here's what their terms say:
> Upon Betterment’s instruction, Betterment Securities, acting as your agent, will open one or more Demand Deposit Accounts (“DDAs”) at Deposit Banks. Betterment Securities, as your agent, may also open one or more linked money market deposit accounts (“MMDAs”) at the Deposit Banks as indicated on the Deposit Bank List. Deposit Accounts are non-transferable.
> ...if you decide to terminate your participation in the Program, you may establish a direct relationship with each Deposit Bank by requesting to have your Deposit Accounts established in your name at each Deposit Bank, subject to each Deposit Bank’s rules with respect to establishing and maintaining deposits accounts.
This makes it sound like separate bank accounts are opened for each customer, though possibly not in the customer's name initially (with Betterment Securities acting as the customer's "agent"). So maybe better than thought?
Honestly savings account interest rate doesn't matter. If you're keeping a significant amount in there that you don't need to spend in the next 90 days, you're probably doing something wrong and should invest it in I bonds or something like Betterment Safety Net.
If you do have that much in short term savings, then that savings interest is taxed as ordinary income, pretty bad for a high income tech worker.
Cannot stress enough how much you should run, not walk, from Wells Fargo. When I was foolish enough to seek a mortgage with them, they instructed me to sign documents stating that a) my partner was my spouse (and doubled-down on that when I highlighted the error), and b) a loan from my uncle to provide necessary "buffer funds" was in fact a gift that would not be repaid (it wasn't, and they knew that). Any bank that knowingly instructs a client to sign a single fraudulent document should be viewed with caution; twice is unconscionable.
I'm currently very happy with the Vanguard Cash Plus account for savings (https://investor.vanguard.com/investment-products/cash-inves...), though I think it's invite-only. I see you've got plenty of good suggestions in replies, though - you'll do fine. Good luck! :)
I recommend Ally. Very good customer service (on rare occasions I called immediate pickup or just a few minutes). Their banking app is good (used to be simper/better in the past imho) and they are known for competitive interest rates (Savings is at 3.75% right now)
Interesting that the primary way they are advertising to fund this is vis Apple Card’s rewards eg your cash back gets deposited in this savings account. So it is encouraging you to use your Apple Card more.
This is below current market rates for savings accounts (edit: for online-based high-interest savings accounts). Current highest rate for a no-minimum FDIC-insured account is from UFB, which is 4.81% APY: https://www.fool.com/the-ascent/banks/the-highest-savings-ac...
Yes but then you have to use those banks, set up accounts, deal with transfers, etc. Just wait, you'll be able to buy and sell stocks and open up an IRA with Apple here within a few years at this rate.
I also wouldn't call it below market rates. I'd call it "below the highest market rate" because rates for savings accounts vary and there isn't a standard "market rate".
I read some reviews about how awful some of these banks are and it turned me off. People putting their money in and having it disappear. People not getting their money back out. Having a bank you can trust is worth something, even if you get slightly lower interest.
Other reputable banks like Amex or Discover are only returning 3.75% right now.
There are plenty others offering north of 4%, and north of apple's rate, that are reputable (not saying UFB isn't, but it's definitely not a household name).
The delta between, say, 4.55% and 4.8%, on the amounts I'm holding, may not be worth the potential extra headache of working with a lesser known bank. Introducing more risk (or just taking time to open more accounts) to earn, say, an extra $8/month... at some point becomes not worth it.
Very true. It irks me that Chase/WF/etc offer 0.03% or something, what am I supposed to do with that rate, other than take all my money to some other bank?
It's a legitimate bank, but the banking experience feels very third rate, and online reviews are scathing. I opened an account but chickened out from depositing anything after their account linking didn't work and no support for that.
Even the default cash positions for many brokerages (money market funds) are now paying over 4%. Untouched cash positions in my Vanguard and Fidelity accounts are doing better than most CDs or bonds right now.
FDIC says the national average is 0.35% for savings accounts; Bankrate survey of banks says 0.24%. Granted this included dinosaurs taking advantage of their customers, but the point is that it's weird to use the maximum to make claims about "market rate". Of major institutions that are trying to compete on rates, it seem to be 4.0% +/- 0.5%.
4.15% is lower than 4.81%, but how did you decided that UFB defines "current market rates?"
UFB, I note, does not offer a debit card.
4.15% is not the highest yield currently available, but it would put them fourth on this list[0] of ten, making them better than average even on that rarified list. This without fees or minimums, which would put them behind only Betterment, which is not a bank, but a brokerage account.
As always with an Apple offering, there are ways that some people under some circumstances can find better terms so long as they don't care about some of the benefits Apple is offering, but that's a very long way from "below current market rates," and comes from a company a lot of people are already trusting with their funds.
It's fine if you already have an account with UFB, carry on! And next month when it's a different company leading the pack, transfer. And the month after that, while Apple is still consistently in the top five.
That assumes that 4.81% will remain 4.81% for the foreseeable future.
It's a common tactic to offer premium rates, and then drop the rate precipitously once they meet some quota N months later. Capital One did this circa 2020, for example.
That being said, if you're willing to play the game and monitor your monthly interest rate updates, go for it.
Otherwise, if you're a normal person who likes to ignore their HYSA account, it's prudent to go with people who are offering a rate closer to 4% (e.g. Marcus by GS is currently at 3.9%).
with a Savings account from Goldman Sachs, which offers a high-yield APY of 4.15 percent. Annual Percentage Yield (APY) is 4.15 percent as of 4/14/2023. APY may change at any time. Maximum balance limits apply.
I wonder how long that APY is going to sit at that level (and what the maximum balance limit is), given than Goldman Sachs' Marcus accounts offer 3.9% and I don't think there's any balance limit and there is no minimum balance requirement either. https://www.marcus.com/us/en/savings/high-yield-savings
> In January, a report indicated that Goldman Sachs had lost over $1 billion through its partnership with Apple for the Apple Card. Despite this, however, the company says that it remains committed to its partnership with Apple and expects it to be lucrative in the long run.
Related to that Goldman Sachs seems to be taking everything they are learning from Apple and applying it to Marcus, their growing consumer banking brand, and Marcus certainly seems low-margin targeted.
I'm surprised that Apple Card (credit and savings) aren't available outside the US yet.
A financial product that is only available to iPhone users seems like a reasonable business, but if it's only available in one market it's limited and you can't build much else on top because it's slicing the market to granularly.
I realise that international financial products are hard, but isn't that the reason why Apple is delegating the finance part to Goldman Sachs (and I suppose, theoretically, others in other countries) – so that they don't need to deal with the nitty gritty in each region?
Not too many options that are high spending countries with plenty of iPhones but also a regulation wild west and people willing to pile on hundreds of thousands in high APY debt like the US
a true sweet spot
Less than half of French people even have a single credit card
> Less than half of French people even have a single credit card
Got a source ?
https://www.cartes-bancaires.com/cb/chiffres/ says 76M cards over a population of 67M (50M for people over 18yo). Sure some people have multiple cards, but that sounds hard to believe. (Also that's not counting non-CB credit cards. Those are pretty rare in France, but I have one)
(Maybe I'm misunderstanding what you said in "a single credit card")
I don't understand how is that relevant to savings or Apple Card though? I mean sure Apple Card is currently a credit card, but I don't think that's relevant? In France most banks just give the customer the choice between credit and debit cards, and we just mostly prefer debit cards. Apple could probably just do that as well.
That being said, I guess the reason there is no Apple Card in Europe, is that you can't make 2%+ markup on card payments.
> people willing to pile on hundreds of thousands in high APY debt like the US
That’s a pretty unfair characterization of CC borrowing in the US. I’m sure there are some instances of that but most people have either a minimal amount on CC or none at all.
I would think it will vary greatly by location and status. I'm 34 and in a fairly low income area / states. The only people I know that aren't drowning in credit card debt are people that manage to be financially responsible enough to never get one at all.
I thought myself fairly responsible until the pandemic hit and now I'm nearly $18K in the hole on credit cards I'm crawling out from under slowly.
Starting with the US makes sense, but 2 years later not having launched elsewhere and launching a new US-only product, that feels like longer than I expected.
It's not explicitly mentioned if the deposits are FDIC insured, but looks like they are reading the foot note. I would have expected Apple to make it abundantly clear given recent bank failures.
They are, it's a Goldman Sachs account branded by Apple.
But the recent bank failures have shown that the US government did not even hesitate to cover depositors who put themselves at risk. Goodbye moral hazard.
It's interesting that they will not accept any transfer-in, even reject a transfer, if the balance exceeds $250,000. This must be because of the FDIC insurance limit, and hence protects the consumer's savings. Quite the opposite of what some banks are trying to do: offer accounts that try to provide FDIC insurance over 250k by spreading your money among other banks.
MAXIMUM DEPOSIT LIMITS
The maximum balance for your Account is $250,000. We will include any funds deposited into your Account but not interest
or Daily Cash you’ve earned when determining the maximum balance limit. We may reject and return any funds transfer if
your Account exceeds the maximum deposit limit. You authorize us to return any funds that exceed the maximum balance
limit by check.
At what point does an investment with Apple actually become just as safe if not safer than the FDIC? Neither is realistically going to fail, but with the debt ceiling once again rearing it’s head, I have more trust in the leadership of Apple not doing something stupid than I do in the US government not doing something stupid. Governmental incompetency and dysfunction seems like a bigger risk than insolvency of Apple.
That is assuming that the only reason the government wouldn't pay out FDIC insurance is collapse of the dollar (or that refusal to pay would cause the collapse of the dollar). I don't think that is the case. I would put the odds of the US government doing something stupid much higher than the collapse of either the dollar or Apple.
Apple would suffer during a default just like the rest of us. Intimidating the majority of voters and businesses is THE point of the debt ceiling stunt.
> Both are as close to 100% that this conversation is effectively meaningless. I just think it is an interesting hypothetical.
The first has almost 0% chance of happening. Apple will never bail out its customers for insured deposits, as that money is guaranteed by the FDIC. Why would they effectively "donate" money for free to the FDIC?
The only universe in which that happens is the one in which the FDIC somehow is insolvent and the federal government abandons the FDIC and the cascading effects of the latter (which would almost certainly create a national if not global financial crisis that makes 2008 look quaint) somehow don't affect Apple enough that they could use their additional cash on hand to pay their entire banking liabilities. Which is pretty unlikely, given that most non-banking companies don't have cash reserves that large that they can dip into at a moment's notice. Even Apple, the world's biggest company, has "only" $50B in cash on hand as of last quarter, which sounds like a lot but would not be enough to weather that kind of a crisis and still be able to make depositors whole even if they felt that it was their responsibility.
>The first has almost 0% chance of happening. Apple will never bail out its customers for insured deposits, as that money is guaranteed by the FDIC. Why would they effectively "donate" money for free to the FDIC?
Yes, this was a hypothetical based on a situation in which these accounts weren't protected by FDIC, either by design or some problem with the FDIC. Apple isn't going to donate money to the federal government. But I could see it donating money to its customers as an attempt to retain the value of its brand.
>The only universe in which that happens is the one in which the FDIC somehow is insolvent and the federal government abandons the FDIC and the cascading effects of the latter (which would almost certainly create a national if not global financial crisis that makes 2008 look quaint) somehow don't affect Apple enough that they could use their additional cash on hand to pay their entire banking liabilities. Which is pretty unlikely, given that most non-banking companies don't have cash reserves that large that they can dip into at a moment's notice. Even Apple, the world's biggest company, has "only" $50B in cash on hand as of last quarter, which sounds like a lot but would not be enough to weather that kind of a crisis and still be able to make depositors whole even if they felt that it was their responsibility.
The FDIC might not have the money to cover a failure as big as Goldman Sachs and the cascading effects (a quick Google search says the FDIC has $128b in the insurance fund and GS has $110b in consumer deposits, so it seems close at the moment). The big question is what would the US government do in response to a failure this big. Would a polarized and split Congress want to or even be able to compromise on a rescue plan? What if the issue is specifically at Goldman Sachs due to corruption or some other crime rather than an issue with the overall economic environment? Like I said, the odds of this situation are extremely low, but so are the odds of Apple accepting the destruction of their brand.
> This sounds like the type of situation where money becomes worthless. An asteroid the size of Texas just fell into the Pacific? What will happen to my FDIC insured funds!?
Yeah, I would be more worried about the USD itself becoming unstable than about the FDIC not paying out insured deposits.
And at that point, Apple would have far bigger concerns than the brand risk of people losing their Goldman-held savings.
Apple has approximately $50B in cash on hand. The US government can print a trillion+ on a whim. So if there's a banking crisis I'm going to trust the FDIC to bail me out over Tim Cook (and there's a pretty strong recent precedent of exactly that).
>The US government can print a trillion+ on a whim.
To be clear, there is a difference between the ability to do something and the will to do it. That is why I referenced the debt ceiling. The government could easily spend more than the debt ceiling. It is also unlikely there would be serious repercussions to just abolishing the debt ceiling. And yet we constantly have to have the debate of whether we should raise the debt ceiling. It is a game of political theater. Are we sure something similar could never happen with a bailout big enough to save Goldman Sachs?
Don't buy Apple Stock instead of keeping some cash in a bank account.
* If you need cash in an emergency it's possible that Apple stock will be negatively effected by the same emergency.
* Anything that causes FDIC to fail will negatively impact Apple Stock, causing you to lose a lot of the value you were trying to protect against that exact situation.
* Cash in a bank account is more liquid than a stock. It's common for the sale of a stock to result in usable cash after 3 business days. I can withdrawal from a savings account 24/7. If you have an unplanned and urgent situation cash is fantastic.
* The odds are higher than the US Government stays solvent over the next 120 years than Apple does. Governments are designed for more long term stability than companies.
HOW AN ACCOUNT CAN BE OWNED
Individual Account
An Account may only be owned by one person.
Payable-On-Death (“POD”) Designation
You may designate one or more beneficiaries (up to six) to receive the funds upon your death for your Account.
They're making money on the difference between their interest rate and EFFR. Therefore, no, they aren't rejecting money for that reason because they're profiting from every dollar saved through this; it isn't a charity.
Canada is another country with a separate banking system and has a different rate of inflation. Don't be confused just because both currencies are called "dollar".
True. Our inflation rates are not that far off though. We tend to be attached at the hip for many things, and Canada tends to follow US trends. The point being, there are savings accounts out there better than 1%, if you look for them.
Apple will be getting a piece from Goldman Sachs somewhere. Both Apple Card and Saving account are US only, nearly 4 years since they first launch Apple Card.
What's next? With Apple Watch and Health Monitoring the next step could be Apple Health Insurance? or Apple Mortgage?
Mobile developers needs advertising because, as awful as it is, it's an important business model. It's an important complement to Apple's business model, even if I think they should have stayed out and just used policy/technical means to ensure other companies aren't too sleazy.
I don't see any similar need to get into health insurance though.
I was thinking in terms of the consumer-facing experience, which was pretty slimy and definitely not one of the most straightforward nor honest-feeling experiences. I worked briefly at Radio Shack in the late 90s and part of the job was selling the first generation of digital cell phones. Our competition was phone kiosks in the mall and places like that. The whole experience was ripe for a focus on the consumer transaction as well as the consumer experience (example: visual voicemail).
I worry this makes iPhones that much richer (heh) of a target. I would be hesitant to add a significant amount of money to my wallet’s savings account as it would create an incredibly financially potent single point of failure in the event my iPhone is stolen and compromised.
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[ 4.4 ms ] story [ 259 ms ] threadIn the very least it will educate many uninformed folks like myself they are getting shafted at their current banks.
And my favorite:
SaveDifferent
Savings Connect [1]: 4.50% APY, no minimum balance, no fees
Platinum Savings [2]: 4.75% APY, min. $5000 balance to qualify for APY, but once you qualify 4.75% APY on whole balance (not just balance above $5000)
I use the savings connect personally and am considering whether or not I want to open a platinum savings account.
[1]: https://www.cit.com/cit-bank/savings-connect
[2]: https://www.cit.com/cit-bank/platinum-savings
https://www.marcus.com/us/en/savings
Seems like they want people to go via Apple.
It is also in Apple's best interest to drive deposits, as most of these agreements end up with the bank (GS) and the provider (Apple) splitting the interest earned. Even if they are currently passing most of the interest to the customer for now, they will want to build up deposits as high as possible so they can lower rates in the future and print money.
While not huge on an individual basis, it could be a large $$ across the entire Apple Card user base (from Goldman's perspective)
Their cult following takes care of that honestly
> Starting today, Apple Card users can choose to grow their Daily Cash rewards with a Savings account from Goldman Sachs, which offers a high-yield APY of 4.15 percent
Meanwhile, Marcus by Goldman Sachs just bumped their APY to 3.9%.
https://www.bankrate.com/banking/savings/marcus-savings-rate...
Edit: In the very least it will educate many uninformed folks like myself they are getting shafted at their current banks. Double edit: Thank you for all the helpful links and information!
Park 250k in there and you're getting over $950 a month right now. Spread those chunks around multiple banks, assuming you have those chunks, and you'll have a decent modest income while these rates last.
And yes, I'm doing exactly this and no, I don't have a day job right now and yes, my overall holdings are still going up. This is an unusually good time to be holding cash.
Also I know the trivial inflation arguments about how I'm hypothetically losing purchasing power. But again I don't need hypothetical things to be bought, just mine.
Right now it's covering my bills and the number is still rising. This strategy is subject to change without notice.
Until someone like Apple comes in with a one click UX to open a bank account and set everything up, existing banks have no incentive to make existing clients happier because they're extremely unlikely to move banks (or even to open a better yielding type of account)
I don't visit my bank either in most cases. However, I can if I need to. That's a different kind of peace of mind compared to a e-bank that has no customer-facing physical location.
Starling also has a banking license.
I stopped using BoA because the in branch experience has declined. I never used Wells Fargo for obvious reasons.
My previous employer had at least two different Ceridian installs, one was for W2s and the other was for regular payroll, they used different passwords, half the time they'd expire out by the time you logged in and you'd have to get HR to reset it, etc. And even if you want to go back and mess with it, when does it take effect? A lot of people don't have a cushion sitting in a bank account and can't afford to have a paycheck disappear and then spend a couple days pairing their credit card payment to the new bank account etc.
That's why you can get those $600 promos or whatever if you open a new checking account and turn on an auto-deposit. Most people will set it and leave it.
https://xkcd.com/1053/
Banks capitalize (hah) on unsophisticated deposits to underpay them and profit from the spread. Check if your brokerage has a short dated government securities money market fund (Fidelity = SPAXX [1], Vanguard = VMFXX [2]). Not investing advice!
[1] https://fundresearch.fidelity.com/mutual-funds/summary/31617...
[2] https://investor.vanguard.com/investment-products/mutual-fun...
Capital One is paying 3.5% right now for "Performance Savings".
Note that these rates change in relation to the federal interest rates. You'll sign up for a great rate, and in 3 years it can go back down to a half percent
Best high-yield savings accounts in April 2023:
https://www.bankrate.com/banking/savings/best-high-yield-int...
Do you have a more preferred financial website?
Meanwhile money market funds are yielding over 4%. Interactive brokers is offering over 4% and it’s insured to some ridiculous amount (standard 250k + extra coverage from Lloyds of London).
You can buy 3 month or 6 month treasuries with yields well over 4%.
I don’t know why anyone would want to keep cash in the big banks, unless they really need it liquid in the short term.
I just look at Wells Faro, and they have $900 billion in interest bearing deposits. With NI of $16 billion, just going up to 1% will wipe out 55% of profit.
My point was essentially to stay viable, the bank needs to have some profit margin. Here is a classic business choice between maintaining or improving profit margin, and maintaining or improving services.
So my point was they could obviously remaining viable while offering higher rates, they choose not to because it increases short term profit - if they think they are losing enough business to other banks with better rates, presumably they will start raising them to compete.
The fact that they can't really meet current federal rates and stay profitable is interesting, it suggests they have some pretty heavy cost centers to carry.
0.3%, or something similar.
I’ve been using different banks with real high yield for a long time. My current choice is almost 4% (after climbing a ton last year with all the hikes). A number of banks offer similar rates.
Some places are starting to offer non trivial rates on checking. I think AmEx may be paying over 1% interest on their checking accounts (I know, think it’s new) instead of the common 0.0005% if you’re lucky enough to get interest at all.
Sadly you have to shop around. Even credit unions often don’t offer good savings accounts, even if better than the big banks.
Credit unions are typically more competitive than big banks in general. If you truly want to make the most out of every penny then you should be unbundling your bank services (checking at CU A, savings at CU B, credit at X, etc.). This is especially easy with credit unions because they are typically part of a cooperative that streamlines inter-bank transfers (it usually takes < 24hr to transfer between my savings and checking).
There can be higher yield options for long-term savings (depending on market conditions at the time). The classical wisdom is to keep your money in CDs[1], but you're locking in an interest rate for <duration>, so if interest rates go up you could lose out.
If you're saving for more than a couple (1-3) of years you really should be looking at handing over some of your money to someone who profits when you profit (money market or brokerage). Remember that even at the current ~5% of CDs, the banks have ensured that they will be making a profit even during moderate market turmoil.
It's also not a bad idea to invest in something that is guaranteed to maintain value (such a gold or platinum), to hedge against recessions.
[1]: https://www.bankrate.com/banking/cds/cd-rates/
I don't agree CUs are more competitive always than big banks. I think for the most part big banks have better credit card offerings for example. There are lots of reasons someone would go for a big bank like Chase for credit cards.
My CUs are west-coast, and I moved to the east coast last year. I haven't run into any problems. On the off-chance I had to walk into a brick-and-mortar bank (depositing cash is about the only reason I'd need to do that, so never), I could visit a coop instead.
> I don't agree CUs are more competitive always than big banks
Absolutely. We're on a mainstream brand miles reward card because my wife likes traveling. CC rewards at my CU were basically worthless - the rates were pretty competitive, though.
That's the "wholesale" savings interest rate. The less you are making compared to that, the more your bank is profiting.
As an aside, the interest the banks earn from this is newly created money.
With 17 trillion dollars currently deposited, that's $833 billion of inflationary pressure every year.
[0] https://www.federalreserve.gov/monetarypolicy/reserve-balanc... [1] https://fred.stlouisfed.org/series/DPSACBW027SBOG
> With 17 trillion dollars currently deposited, that's $833 billion of inflationary pressure every year.
specifically, this part, what do you mean by pressure and which way is it pushing
> that's $833 billion of inflationary pressure every year.
Needless to say I'm going to be trying it out! Thanks Apple!
Edit: It looks like they have a checking account too (https://www.betterment.com/checking), which also has better terms than Chase.
People who know more about this stuff than me: is there any reason not to just move over completely? Technically Betterment is not a bank, but it sounds like these cash accounts are backed by accounts at banks that Betterment manages for you, which means they're insured (and in fact, you can insure more than $250k because multiple banks are involved). Is there any downside I'm not seeing?
There is some small risk that if betterment folds, those funds aren’t protected. It’s afaik never been really tested in court. FDIC would protect only the underlying bank - not betterment. It’s a very small risk though. But a real bank doesn’t have that risk.
A lot of these small investment companies like betterment or wealth front are on pretty shaky financial grounds - so it could come up sooner than expected.
Is it possible they'd try to claim first-dibs on your funds that are living in other banks if they went under and had to pay back shareholders?
Typically when companies/banks do this sort of pass through banking, the money isn’t actually held in a personal account at the host bank. It’s usually held in one giant account that had a “managed on behalf of many” type structure. This is legal from an FDIC perspective, but it’s held in the not-banks name (aka betterment). So if betterment goes into debt, it’s a grey area if they could use that money.
They could also mismanage money during that “temp uninsured” period. Again, they’re not a bank so they don’t necessarily comply with banking regulations so you don’t know how long that period is or what’s happening.
There are real regulated entities (banks brokers credit unions etc) that offer good rates and less risk. I don’t know why you’d expose yourself to any risk for 0.x% APR. Even Goldman Sachs (the underlying bank of apple) lets you get a good interest rate on savings directly.
Here's what their terms say:
> Upon Betterment’s instruction, Betterment Securities, acting as your agent, will open one or more Demand Deposit Accounts (“DDAs”) at Deposit Banks. Betterment Securities, as your agent, may also open one or more linked money market deposit accounts (“MMDAs”) at the Deposit Banks as indicated on the Deposit Bank List. Deposit Accounts are non-transferable.
> ...if you decide to terminate your participation in the Program, you may establish a direct relationship with each Deposit Bank by requesting to have your Deposit Accounts established in your name at each Deposit Bank, subject to each Deposit Bank’s rules with respect to establishing and maintaining deposits accounts.
This makes it sound like separate bank accounts are opened for each customer, though possibly not in the customer's name initially (with Betterment Securities acting as the customer's "agent"). So maybe better than thought?
If you do have that much in short term savings, then that savings interest is taxed as ordinary income, pretty bad for a high income tech worker.
I'm currently very happy with the Vanguard Cash Plus account for savings (https://investor.vanguard.com/investment-products/cash-inves...), though I think it's invite-only. I see you've got plenty of good suggestions in replies, though - you'll do fine. Good luck! :)
https://www.ally.com/bank/interest-checking-account/
This is about offering a consumer product, and attempting to disrupt the market for banking services in the US.
I also wouldn't call it below market rates. I'd call it "below the highest market rate" because rates for savings accounts vary and there isn't a standard "market rate".
Other reputable banks like Amex or Discover are only returning 3.75% right now.
Amex slightly lower, citizens access slightly higher.
Banks looking like they may lead to a more questionable experiences have even higher rates to offset higher chance of frustrations.
https://www.cit.com/cit-bank/bank/savings/savings-connect-ac...
It is also part of First Citizens which is a decent sized institution:
https://en.wikipedia.org/wiki/First_Citizens_BancShares
The delta between, say, 4.55% and 4.8%, on the amounts I'm holding, may not be worth the potential extra headache of working with a lesser known bank. Introducing more risk (or just taking time to open more accounts) to earn, say, an extra $8/month... at some point becomes not worth it.
UFB, I note, does not offer a debit card.
4.15% is not the highest yield currently available, but it would put them fourth on this list[0] of ten, making them better than average even on that rarified list. This without fees or minimums, which would put them behind only Betterment, which is not a bank, but a brokerage account.
As always with an Apple offering, there are ways that some people under some circumstances can find better terms so long as they don't care about some of the benefits Apple is offering, but that's a very long way from "below current market rates," and comes from a company a lot of people are already trusting with their funds.
It's fine if you already have an account with UFB, carry on! And next month when it's a different company leading the pack, transfer. And the month after that, while Apple is still consistently in the top five.
0. https://www.investopedia.com/best-high-yield-savings-account...
It's a common tactic to offer premium rates, and then drop the rate precipitously once they meet some quota N months later. Capital One did this circa 2020, for example.
That being said, if you're willing to play the game and monitor your monthly interest rate updates, go for it.
Otherwise, if you're a normal person who likes to ignore their HYSA account, it's prudent to go with people who are offering a rate closer to 4% (e.g. Marcus by GS is currently at 3.9%).
I wonder how long that APY is going to sit at that level (and what the maximum balance limit is), given than Goldman Sachs' Marcus accounts offer 3.9% and I don't think there's any balance limit and there is no minimum balance requirement either. https://www.marcus.com/us/en/savings/high-yield-savings
EDIT: I see the max balance limit is $250k https://www.goldmansachs.com/terms-and-conditions/Deposits-A...
https://9to5mac.com/2023/02/16/apple-card-future-goldmans-sa...
> In January, a report indicated that Goldman Sachs had lost over $1 billion through its partnership with Apple for the Apple Card. Despite this, however, the company says that it remains committed to its partnership with Apple and expects it to be lucrative in the long run.
A financial product that is only available to iPhone users seems like a reasonable business, but if it's only available in one market it's limited and you can't build much else on top because it's slicing the market to granularly.
I realise that international financial products are hard, but isn't that the reason why Apple is delegating the finance part to Goldman Sachs (and I suppose, theoretically, others in other countries) – so that they don't need to deal with the nitty gritty in each region?
a true sweet spot
Less than half of French people even have a single credit card
Got a source ?
https://www.cartes-bancaires.com/cb/chiffres/ says 76M cards over a population of 67M (50M for people over 18yo). Sure some people have multiple cards, but that sounds hard to believe. (Also that's not counting non-CB credit cards. Those are pretty rare in France, but I have one)
(Maybe I'm misunderstanding what you said in "a single credit card")
adoption across countries https://www.statista.com/statistics/968220/credit-card-owner...
your link seems to be confusing debit cards with credit cards
Apple card is not a debit card, which is widely used in Europe, with much less credit card/debt normalized vs. the US
I don't understand how is that relevant to savings or Apple Card though? I mean sure Apple Card is currently a credit card, but I don't think that's relevant? In France most banks just give the customer the choice between credit and debit cards, and we just mostly prefer debit cards. Apple could probably just do that as well.
That being said, I guess the reason there is no Apple Card in Europe, is that you can't make 2%+ markup on card payments.
That’s a pretty unfair characterization of CC borrowing in the US. I’m sure there are some instances of that but most people have either a minimal amount on CC or none at all.
I thought myself fairly responsible until the pandemic hit and now I'm nearly $18K in the hole on credit cards I'm crawling out from under slowly.
They could expand to Europe and Canada without too much effort, but I’m not surprised to see them start with the US.
Anyone have thoughts?
But the recent bank failures have shown that the US government did not even hesitate to cover depositors who put themselves at risk. Goodbye moral hazard.
From the footnote 1: https://www.goldmansachs.com/terms-and-conditions/Deposits-A...
Apple would have to be backed by something other than the dollar for this to be remotely possible.
1. GS going under and Apple bails out its customers who hold these accounts.
2. GS going under and the US government bails out everyone.
Both are as close to 100% that this conversation is effectively meaningless. I just think it is an interesting hypothetical.
The first has almost 0% chance of happening. Apple will never bail out its customers for insured deposits, as that money is guaranteed by the FDIC. Why would they effectively "donate" money for free to the FDIC?
The only universe in which that happens is the one in which the FDIC somehow is insolvent and the federal government abandons the FDIC and the cascading effects of the latter (which would almost certainly create a national if not global financial crisis that makes 2008 look quaint) somehow don't affect Apple enough that they could use their additional cash on hand to pay their entire banking liabilities. Which is pretty unlikely, given that most non-banking companies don't have cash reserves that large that they can dip into at a moment's notice. Even Apple, the world's biggest company, has "only" $50B in cash on hand as of last quarter, which sounds like a lot but would not be enough to weather that kind of a crisis and still be able to make depositors whole even if they felt that it was their responsibility.
Yes, this was a hypothetical based on a situation in which these accounts weren't protected by FDIC, either by design or some problem with the FDIC. Apple isn't going to donate money to the federal government. But I could see it donating money to its customers as an attempt to retain the value of its brand.
>The only universe in which that happens is the one in which the FDIC somehow is insolvent and the federal government abandons the FDIC and the cascading effects of the latter (which would almost certainly create a national if not global financial crisis that makes 2008 look quaint) somehow don't affect Apple enough that they could use their additional cash on hand to pay their entire banking liabilities. Which is pretty unlikely, given that most non-banking companies don't have cash reserves that large that they can dip into at a moment's notice. Even Apple, the world's biggest company, has "only" $50B in cash on hand as of last quarter, which sounds like a lot but would not be enough to weather that kind of a crisis and still be able to make depositors whole even if they felt that it was their responsibility.
The FDIC might not have the money to cover a failure as big as Goldman Sachs and the cascading effects (a quick Google search says the FDIC has $128b in the insurance fund and GS has $110b in consumer deposits, so it seems close at the moment). The big question is what would the US government do in response to a failure this big. Would a polarized and split Congress want to or even be able to compromise on a rescue plan? What if the issue is specifically at Goldman Sachs due to corruption or some other crime rather than an issue with the overall economic environment? Like I said, the odds of this situation are extremely low, but so are the odds of Apple accepting the destruction of their brand.
An asteroid the size of Texas just fell into the Pacific? What will happen to my FDIC insured funds!?
Yeah, I would be more worried about the USD itself becoming unstable than about the FDIC not paying out insured deposits.
And at that point, Apple would have far bigger concerns than the brand risk of people losing their Goldman-held savings.
To be clear, there is a difference between the ability to do something and the will to do it. That is why I referenced the debt ceiling. The government could easily spend more than the debt ceiling. It is also unlikely there would be serious repercussions to just abolishing the debt ceiling. And yet we constantly have to have the debate of whether we should raise the debt ceiling. It is a game of political theater. Are we sure something similar could never happen with a bailout big enough to save Goldman Sachs?
They are highly liquid instruments, but in a bank run, Apple likely wouldn't be any more able to convert them to actual cash than any other party.
* If you need cash in an emergency it's possible that Apple stock will be negatively effected by the same emergency.
* Anything that causes FDIC to fail will negatively impact Apple Stock, causing you to lose a lot of the value you were trying to protect against that exact situation.
* Cash in a bank account is more liquid than a stock. It's common for the sale of a stock to result in usable cash after 3 business days. I can withdrawal from a savings account 24/7. If you have an unplanned and urgent situation cash is fantastic.
* The odds are higher than the US Government stays solvent over the next 120 years than Apple does. Governments are designed for more long term stability than companies.
FDIC is a much, much, better explanation.
And Apple isn't catering to small business here.
https://www.betterment.com/cash-portfolio#:~:text=FDIC%20ins...).
https://www.wealthfront.com/cash
Insurance is $2.75M but IBKR isn't a bank and isn't subject to the same problems in the same ways (e.g. bank runs).
What's next? With Apple Watch and Health Monitoring the next step could be Apple Health Insurance? or Apple Mortgage?
I don't see any similar need to get into health insurance though.
Citi's fancy "Citigold Private Client" savings account for people with $1M+ in it is at 0.35%.
(My favorite bit about that account: they have an interest rate tier starting at $10,000,000,000,000+ on https://online.citi.com/US/ag/current-interest-rates/savings...)
However, given recent trickery around stealing iPhones and taking over entire accounts: https://www.wsj.com/articles/apple-iphone-security-theft-pas...
I worry this makes iPhones that much richer (heh) of a target. I would be hesitant to add a significant amount of money to my wallet’s savings account as it would create an incredibly financially potent single point of failure in the event my iPhone is stolen and compromised.