In the wake of all the recent banking fear and chaos, Apple has gotten quite a bit of buzz for rolling out a new savings account with a 4.15% interest rate.
A handful of clients reached out asking about it this week so here’s the scoop
Apple is offering 4.15% interest on personal savings with no minimums, no maximums, no fees, and no other strings attached through Goldman Sachs.
The rate is very good, but it’s not the highest in the market that you can earn right now on your personal* savings.
Does that mean you shouldn’t open a savings account with Apple? No.
There are a few reasons you might want to.
If you have the Apple Credit Card, for example, one of the perks of opening the companion savings account is that your cash back earned on your Apple Card spending goes straight into savings to earn that rate. Super convenient.
True to Apple’s brand experience, the account opening experience is also very seamless especially compared to other traditional banks and financial institutions.
Because the Apple savings account is a banking product, offered by a traditional bank, it carries the same FDIC insurance coverage as any other savings account.
That being said, many online banks have extremely easy account opening processes for savings accounts, and carry the same FDIC coverage, so if you’re looking for the highest interest rate as your top priority- there are at least a dozen online banks offering more than 4.15%, many offering closer to 5%.
Wealthfront, a roboadvisor (i.e. an online app that provides automated financial guidance and services), like Apple, is not a bank but offers a similar experience for savings by partnering with multiple banks behind the scenes. The interest rate on their savings account is currently 4.3% and because of their relationship with a banking network in the background they are able to offer up to $3M of FDIC insurance.
Many of the banks offering much higher rates like 4.75% and 5% interest on savings do have minimum savings requirements, but these are relatively low (Mostly $1000 or $5,000 deposits required to the rate) with no other fees.
Based on my experience, I would guess that the online user experience at these banks won’t be as sexy as those of Apple and Wealthfront because these banks tend to be smaller, and many are credit unions.
Online banks aren’t the only option when it comes to earning more on your savings.
While brick and mortar banks tend to generally have notoriously low interest rates, many are offering and have offered rates higher than 4.15% in the last month or so. It probably doesn’t make sense to open a savings account with a traditional bank unless you already bank there, but if you have cash at a traditional bank that isn’t earning a competitive interest rate it is always worth asking whether they have other savings products with higher rates.
There are also other ways to get higher growth on savings outside of savings accounts- money market accounts, CDs, Savings Bonds, but there are multiple considerations to weigh with these like liquidity, need for FDIC insurance, etc.
Ultimately where you choose to park your savings isn’t always about what pays the most. Preferences, convenience, risk tolerance, and your goals all factor in. There isn't one universal best option.
How important optimizing your savings is boils down to how much you have and how long you keep it there. You need to have your money sitting in a savings account for the whole year to earn the full interest rate AND even 20% interest on $100 is just $20.
If you're an entrepreneur who is frustrated by how little you're taking home from your business compared to how much you're earning, and you want to learn how to take home more using the tax benefits available to you so that you can take full advantage of these increasing savings rates AND your investment opportunities so you can build real wealth- let's talk about how I might be able to support you in achieving those goals this year
(*Keep in mind, bank offerings on business accounts are very different than what’s available to individuals, but there are online business savings accounts offering 4 and 5% right now also with FDIC insurance and no strings.)