People Put Nearly $1B into Apple Savings Accounts in First 4 Days | Hacker News Reader

People Put Nearly $1B into Apple Savings Accounts in First 4 Days

gizmodo.com

46 pointsourmandave45 comments

I have read up on it but I don't get the appeal (i.e. what the benefits are).

My US bank allows me to write checks (I don't actually have a checkbook, but I use bill pay which it will do electronically if it can and by issuing a paper check if not) and make various transfers, like Zelle. This has comparatively very limited payment capability. How would you pay your mortgage? There are even very strict restrictions on moving your cash out!

It does have a higher interest rate than some banks, at least at the moment, but you can get these rates from competitors without the other limitations.

In general all the current Apple banking offers (apple card, apple cash, apple savings account) seem pretty meh, and definitely far from great, much less "insanely great". The only Apple financial product I consider even worth remembering was financing your mac purchase back in 1984.

It's also a weird space for Apple to get into: it's highly regulated, has limited (at best) connection/leverage/flywheel with the rest of their product line or company capability, and doesn't even use anything apple-specific (not even their enormous cash horde).

I have an Apple card. I had a few hundred bucks in Apple Cash I earned from cash back just sitting there doing nothing so I swept it off into Apple Savings so sit there and do nothing but at least earn a little interest on it.

I'd imagine the majority of the new accounts have done this as well. It's a secondary, not primary, banking account.

Were you not aware you could transfer that cash to a normal checking account?

What normal checking account pays those rates?

Sure, you could then bounce it to a savings account that pays those rates, or better. The rate isn’t everything.

Apple created a very friendly path of least resistance.

FYI Apple Card / Apple Savings are run by Goldman Sachs & Apple. So I'm guessing they found some value in this operation.

I agree its offering is very mid (just like Apple Card) so I don't use it but for some opening a new account elsewhere is challenging.

Goldman's recent earnings report said they were taking a bath on their foray into the consumer sector, having lost $3B in the process, with a half a billion on consumer loans alone.* I don't imagine they'd be doing the Apple bank account if they weren't contractually obligated. Or maybe they just think there's a hope for some Apple pixie dust.

* https://www.nytimes.com/2023/04/18/business/goldman-sachs-1q...

Some of this is weird accounting stuff - I think they can't recognize income yet because they committed themselves to holding off some of it as insurance against credit card defaults.

Is it possible GS needs Apple to get entry into the consumer (non-money-market) market, possibly to provide the needed liquidity/cover for their institutional investments? In that case, it's an R&D expense for them they can simply write off.

put 100k at 4% vs what a savings account at a bank gives you thats a grocery bill a month in profit.

But why would you put $100k in savings? There are so many better places that are going to get you more than a monthly grocery bill over time.

If you're looking to use that 100k soon, maybe for a new house, or saving to start a business, then you want very safe and liquid options. 4% is close enough to other safe options that if it's easy then that's good enough for some people.

Money market is completely liquid.

> But why would you put $100k in savings? There are so many better places that are going to get you more than a monthly grocery bill over time.

If someone is sitting on 100k in savings, there isn't much of a practical difference to moving it to a money market. The rates aren't significantly different. Some banks have higher savings rates, some higher money market rates. That makes other things your deciding factors such as the trust in a brand, quality of life, ease of use.

Savings accounts are tax-disadvantaged; interest is taxed like ordinary income. I'm not sure about money market funds, but municipal/treasury bonds don't have that problem.

Remember, taxes are designed to benefit rich passive investors, so you gotta act like one.

Income from treasury bonds is taxed by the federal government.

Pretty good deal in a high tax state. I think it should be taxed as capital gains though, it's all pretty arbitrary.

Money market interest income is taxed as income. So replying to the commenter to use money market accounts over savings, there isn’t a big difference. People go with what’s easiest and convenient when rates aren’t significantly different.

Treasury bills are a great option. A 3 month treasury pays over 5% and they are exempt from state income tax. There is not meaningful interest rate risk in a bond that matures in a few months, but you can still sell before maturity if you need the money. So in almost any scenario you can come up with, it’s better than the savings account.

The average person has no idea what a treasury bond is. Everyone knows what a savings account is.

Sure, they sound scary and complicated, but I’m here to tell you that if you have a need to store a six-figure sum of money in a cash equivalent, it’s worth figuring out how to buy a treasury bill from your brokerage to get the most out of your money.

And not lose money unpredictably? Do tell. (I realize 4% is less than inflation)

Money market

Are the rates much higher? Didn't seem so at the online banks.

First think I looked at was vio, more than 50 bps higher.

Any docs or how-tos youd recommend?

Looks like vanguard (vmfxx) is offering 4.78 and apple is offering 4.15. That's about 60 bps, it's not world changing, but vmfxx is a better deal but it may be a little more cumbersome for some.

The stock market has been declining for a while.

4% is better than a 10 - 50% loss.

Emergency savings should NEVER be put anywhere where it would be at risk or inaccessible when you need it most.

Sure, but $100k is very high for emergency savings. Most recommendations point to 3 months. Even if you are very risk adverse, most people do not need $100k for 6 or even 12 months of expenses.

Apple's value add is like Vercel's value add (drawing from the other thread on the front page) - user experience for people who can't be bothered to deal with all the hard bad stuff. It will work up to a certain limit, but once you want the slightest of extra features, you're going to land in a tough spot.

It's a savings account not a checking account.

I hate my Apple card and can't imagine using it for anything outside of buying Apple products. I own an apple computer and an iPad, but I can only check my payments and check my balance on my iPad. I can't connect the card to my budgeting software so I have to enter transactions in manually. If I were to use it daily, I would have to enter so many transactions manually. Obviously I can't pay for things on my Android phone

The cards cash back offers no advantage over other cards outside of buying Apple products directly from Apple and getting a year to pay for products interest free.

It's daily cash from the Apple Card. All your daily cash (1-3% cashback from Apple card purchases) automatically lands in the account.

Also, Apple does not manage these accounts. Goldman Sachs does.

I figured I wouldn't use it, but having the cashback automatically get dropped in savings is an actual godsend. It may actually promote better savings habits for some folks.

I tried transferring $5000 out of my Apple savings account on March 1st. Its now Friday the 5th and I still don't have it in my external bank account. It says processing on Apples side. When I called Apple the said it must be my external bank not posting it. Bull! Next on the phone with Goldman Sacks. Their customer service sucks. 2 hours on the phone. Everyone said the same thing. It must be your external bank. Is this why on Apples end it says still processing? Finally, after 2 hours Goldman's account specialist said it was still transferring and could take up to 7 days. Not in 2023 I told her. And Apple claims it takes 1-3 days. Anyway, still waiting. 1: I will never put a penny into Apple savings again. 2: I will never do business with Goldman Sacks! Ever! Every representative has been taught how to pass the buck! Blame it one your external bank and get him off the phone. This type of business practice wont do Apple or Goldman any good. Lesson Learned!

I put my emergency fund + some in betterment with the same savings rate years ago. It does pay off. Smart of apple to do this.

for people who just want a place to dump their paychecks and have a credit card attached, this looks like a win

the bar is set pretty low right now, maybe people are just better off running daily expenses through a stable company that isn't a traditional bank

I always wondered what would finally take down Apple. Now we know it will be a financial arm.

Every normal company that gets into finance eventually pays the price. At some point, that nice, profitable finanical arm will go into distress and the company will attempt to bail it out with funds from other arms. This cycle will repeat until it either kills the company or the financial arm after it has sucked down more money than you can imagine.

Westinghouse and GE are more recent ones, but the list goes much further back.

I think the fact that these are really Goldman Sachs accounts probably buys them some stability.

Maybe, but the actual "bank" in this arrangement is Goldman Sachs, and they are one of the more established players in finance.

> the actual "bank" in this arrangement is Goldman Sachs, and they are one of the more established players in finance

Cupertino is also hosing Goldman in this relationship [1].

[1] https://9to5mac.com/2023/02/16/apple-card-future-goldmans-sa...

That needs to be put into context of the cost to acquire a customer. https://en.wikipedia.org/wiki/Customer_acquisition_cost

Various sources:

$80 https://askwonder.com/research/average-customer-acquisition-...

> The short version is that it costs around $80 to acquire a customer who returns about $120 in profit.

https://medium.com/unifimoney/changing-the-vicious-cycle-of-...

> It costs on average around $200 to acquire a credit card customer in the US (up to and beyond $1,000 if they are affluent cards like MasterCard World Elite and Visa Infinite).

https://runningwithmiles.boardingarea.com/apple-card-custome...

> The Apple Card doesn’t need any affiliates or marketing yet analysts say that this new card has a customer acquisition cost of $350 and will take several years for Goldman Sachs to turn a profit on it.

---

So the corresponding part of that is "we spent a lot to get a lot of customers. If they remain loyal, then GS will have something quite profitable for a long time." Spending $350 per customer is more than the $200 mentioned... but also much less than the $1000 for high end cards (and the tales of Chase Sapphire Reserve).

Has anyone here done this? I'm curious about why. What's the draw for you?

I haven't, but I'm guessing the interest rate (4.15%) on its own is a big draw

It’s this. The biggest limitation I saw was that you can only transfer out $20k per 7 days, no wire transfers.

I signed up, and it’s mostly the rate and the ease to have rewards just deposited right into the account. The daily cash account seemed to always be used to pay off the Apple Card so it’s nice to have something where the money just accumulates.

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