Apple and Goldman Sachs launched a new savings account yielding 4.15% a year, having first announced the product in October, the interest rate is more than 10 times the national average rate which sits at 0.37%.
It also outstrips competitors such as American Express which is offering 3.75% and Goldman’s standalone savings account that operates under the Marcus brand, which offers 3.9%.
The launch comes as more established banks, in particular regional and smaller lenders, are under growing pressure to offer better savings rates for depositors to stop them transferring cash to higher-yielding products such as money market funds, which have offered better returns in line with rising interest rates.
Customers have pulled about $800 billion in deposits from US commercial banks since March last year when the Fed first started to lift rates after lenders kept deposit rates relatively low while charging more for loans.
Big US financial groups Charles Schwab, State Street and M&T suffered almost $60 billion in combined bank deposit outflows in Q1 2023 as customers continued to move their money in search of higher returns.
The deposit flight has been turbocharged by the collapse of Silicon Valley Bank and two other US lenders, with cash moving out of bank accounts at a pace not seen since the aftermath of the 2008 financial crisis.
US savers have been yanking cash out of low-yielding bank accounts and ploughing it into alternative products such as money market funds or Treasury bills that pay better returns, allowing them to take advantage of the sharp interest rate rises implemented by the Federal Reserve.
Schwab said deposits fell 11%, or $41 billion, in Q1 and 30% year on year to $325.7 billion. Custody bank State Street’s total deposits fell 5% in Q1 to $224billion, more than expected, and the group told analysts that another $4 to $5 billion of outflows of non-interest-bearing deposits could leave in Q2.
The deposit flows, reported in Q1 earnings, heralded an anxious start to a week when dozens of regional and midsized banks are due to announce their results, providing a fuller picture of the damage wrought by the failure last month of SVB and the other lenders.
Last week, some of the biggest US banks, JPMorgan Chase, Wells Fargo and Citigroup, announced they had raked in billions of dollars in deposits from customers fleeing smaller lenders following SVB’s collapse.
The new savings account is being offered to users of Apple’s credit card product, which is also a partnership with Goldman.
Apple is offering savers no fees and no minimum deposit requirements. The maximum balance for an account is $250,000. The deposits will sit with Goldman, which as a licensed bank has access to FDIC insurance.
“Savings helps our users get even more value . . . while providing them with an easy way to save money every day,” said Jennifer Bailey, Apple’s vice-president of Apple Pay and Apple Wallet.
The savings account deepens Apple’s offering of financial services products, which also includes a buy now, pay later programme.
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