Revolut boss says Apple’s new high-yield savings account is ‘scary’ for the market

Put to shame? Revolut boss says Apple’s foray into banking is ‘scary’ after tech firm launched savings account that pays 10 times more interest than average bank

  • Sid Jajodia said Apple’s savings account was a ‘challenge’ to the market
  • Tech firm is offering a 4.15 percent rate – more than ten times the average
  • Apple account drew in nearly $1 billion deposits in its first four days 

The American CEO of Revolut has said Apple’s foray into banking is ‘scary’ after the tech firm launched a competitive high-yield savings account.

Apple made headlines last month when it launched its new account with a 4.15 percent interest rate – around 10 times the average savings rate which is a paltry 0.4 percent. 

The deal drew in nearly $1 billion deposits in its first four days, sources familiar with the matter told Forbes.

Now Sid Jajodia, the US CEO of digital bank Revolut, has admitted the move has presented a ‘challenge’ to mainstream banks who offer much lower rates. 

‘Apple, by the fact of its installed customer base, is one of the greatest distribution channels you can find,’ Jajodia told a panel at the Fintech Nexus conference in New York last week. 

Sid Jajodia, the US CEO of digital bank Revolut, pictured, said Apple’s new savings account presented a ‘challenge’ to the market 

Apple made headlines last month when it launched its new account with a 4.15 percent interest rate - around 10 times the average savings rate

Apple made headlines last month when it launched its new account with a 4.15 percent interest rate – around 10 times the average savings rate

‘So great for Goldman, great for any other bank that partners with Apple,’

He speculated other banks might work with the tech firm though added it would not be open to partnering with ‘anybody and everybody.’

‘You have to have the right scale, the right balance sheet strength, the right credibility for Apple to partner with; he said.

‘So it does create a challenge in the market for others.’

Apple does not necessarily offer the highest rate on the market as Revolut accounts provide APY as high as 4.25 percent.

HMBradley also offers up to 4.5 percent and SoFi accounts have APY as high as 4.2 percent. 

But Apple’s deal remains competitive and is much higher than that offered by mainstream banks.

Data from the Federal Deposit Insurance Corporation states that the current average savings rate from banks is 0.4 percent. 

Chase savings account, for example, offers a 0.01 percent rate on its savings account.

The deal is only available to people who have an Apple Card - Apple's credit card

The deal is only available to people who have an Apple Card – Apple’s credit card

In practice Apple’s competitive deal means users can earn up to 10 times more over the course of a year.

For example, if a customer put $1,000 into a savings account which offered the Fed’s average yield of 0.40 percent and left it alone, they would earn just $4.00 interest in 12 months.

However with the Apple account, they would make $41.50 on their savings – a difference of $37.60.

The firm also does not require a minimum balance or deposit – meaning customers can sign up with as little as $1 – and can withdrawn the funds at any time.

The deal is only available to people who have an Apple Card – Apple’s credit card.

Users must sign up via the wallet app on their iPhones.

Jajodia explained: ‘If all you’re leading with is price on deposits, Apple will probably not be the best price on the market, but it has the best ability to soak up a lot of the price into the deposits in the market.’

He added the offering was ‘scary for anybody who’s leading just with deposit pricing.’

How to sign up to Apple’s new savings account 

To sign up you must have an active Apple Card on your iPhone

– On your phone, open your Apple Card through the Wallet app 

– Click the icon with three dots on the upper right corner

– Select Daily Cash

– There may also be a promotional button to sign up for the account

– Then follow the instructions. It will ask for your Social Security

Once signed up Apple will start putting your Daily Cash into the account by default

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Read more at DailyMail.co.uk