Apple’s 4.15% Savings Account Marks Golden Age of Cash | Hacker News Reader

Apple’s 4.15% Savings Account Marks Golden Age of Cash

bloomberg.com

27 pointscsomar23 comments

I vaguely remember _years_ ago, someone, perhaps here on HN but not sure, predicted Apple would become a bank. It seemed insane at the time... from memory it was maybe around 2010 or perhaps earlier.

Does that ring any bells for anyone here? Id love to re-read it and know the exact date

https://hn.algolia.com/?dateRange=all&page=3&prefix=false&qu...

They aren’t a bank. More like a MVNO but instead of being a mobile carrier they are a value added reseller of a real bank (Goldman Sachs).

Until they're big enough to start their own banking license...

Why does this move indicate they are closer to being a bank? Also, Apple’s profit margins are already much better than a retail bank’s, so why would Apple want to get into that business and be subject to all that extra bureaucracy?

As to why, A) given Apple's lawyers, I'm sure they can structure the deal so as to minimize exposure to regulations for the rest of the empire, and B) they like money. Judging from how much of it they have, they really like money. More to the point though, banking sucks - as did smartphones for a lot of reasons before the iPhone, so if Apple thinks they can make a better product for their customers, they totally would.

Given their inroads into the space already, it's not that far fetched that they wouldn't need to in order to accomplish their goals, simply by co-opting their current partner, Goldman Sachs, which is a bank.

Why this current move moves them closer to being a bank, it means they're now running savings accounts for consumers, which is a very bank-shaped thing to do.

> As to why, A) given Apple's lawyers, I'm sure they can structure the deal so as to minimize exposure to regulations for the rest of the empire, and B) they like money. Judging from how much of it they have, they really like money.

Everyone really likes money. If Apple wanted to, they could just buy Goldman Sachs in cash, it is worth a small fraction of Apple. Or any number of small banks, but there is huge regulatory risk involved, and it is not necessarily true that all opportunities for profit are worth the risks and costs.

As far as I understand, the regulatory hurdles for starting and operating a bank are so big and the ROI so low that pretty much no new bank gets started these days, and only old ones get bought for those who want to get into the banking business.

https://money.cnn.com/2015/07/29/investing/dodd-frank-new-ba...

> it means they're now running savings accounts for consumers,

Are they? Or is it better described as they have integrated their software with that of a bank’s database?

I remember this comment and I think it makes a lot of sense that this is what companies do when they become huge and have excess cash on hand. Apple has a ton of cash and so something like this makes a lot of sense. They can absorb any short-term risk that it may introduce and likely it is structured in such a way that Goldman takes the majority of the risk anyway.

Super shallow and confusing article. One of the counter arguments for savings account presented in the article is that it’s “risky” because deposits over 250k are not insured. As we have seen with SVB all deposit holders were bailed out even above that limit and in case of Apple account, the entire Goldman Sachs would have to go bankrupt for a similar situation.

I’m curious to see what startups will emerge that will make it more worthwhile (risk/reward) to invest than a stable 4% every year.

I think on the broader stock market some staple stocks like food and oil companies are probably going to outperform the savings rate but not without risk.

Pretty sure the maximum cash allowed in the account is 250k

Well, the real interest rate is not 4%, but rather about 1% which is around the historic average tbf.

More like rusty tin than Gold when inflation is running at 10% YoY

Source?

As of March 2023 US inflation was 4.99% the lowest its been in almost two years (since May 2021).

https://ycharts.com/indicators/us_inflation_rate

I think 10% refers to the United Kingdom rate of inflation.

From your link:

“US Inflation Rate is at 4.98%, compared to 6.04% last month and 8.54% last year. This is higher than the long term average of 3.28%.”

Inflation was 8.5% last year, but even that is misleading because it is based on a cherry picked basket of goods that does not include things like fuel or housing costs.

It seems like there are several options for US persons/USD deposits that achieve similar ~4.5% guaranteed returns. Anything similar for EU/EUR deposits? Even services like revolut that operate on the two jurisdictions and offer multiple currency accounts in both, have very different yield rates.

https://archive.ph/lJqN5

wealthfront has 4.3% and 3 mil fdic, way better options available.

Robinhood is 4.4% an insured by up to $1.5m.

But the Apple option is attractive for those who want to trust a bigger name - even though their money is insured.

Obviously Apple is a big name, but bigger than the FDIC?

Robinhood requires a $5/mth subscription for that rate, otherwise 1.5%.

Yes, but the assumption is that the $5 is easily compensated by the extra interest.

It was in comparison to Apple's 4.15% and Wealthfront's 4.3%. So that's .1 - .25%. And I think most would argue that, at max, you should have a year's bills in cash. So that's like $30k - $80k. Assuming standard marginal income tax rate of 30%, that extra interest is $30 - $400, so $21 to $280, and Robinhood's $60/yr loss, so -$39 to $220. Maybe kind of worth it at the high end, but I guess I should also then mention that 4mo T-bills pay 5.17%.

Reply on news.ycombinator.com