Apple’s new high-yield savings account is making a splash, drawing in nearly US$400 million worth of deposits on launch day. By the end of the first week, roughly 240,000 accounts had been opened, bringing in as much as US$990 million in deposits, sources familiar with the matter told Forbes earlier this month.

Launched on April 17, Apple’s Savings account is attracting customers for its high annual return of 4.15%.

An analysis by AppleInsider shows that the Apple Savings account is highly competitive and a strong contender among savings account products available in the US.

It offers a higher return than most savings account products provided by most traditional banking and financial institutions, including Barclays (3.8% APY), American Express (3.75%), Bank of America (0.01%), and Goldman Sachs’ own high yield savings account housed under its Marcus consumer brand (3.9%).

Apple’s Savings account is offered through a partnership with Goldman Sachs Bank USA, the unit of the banking group that runs Marcus. The bank also powers Apple’s credit card, Apple Card.

Apple’s new Savings account

Apple’s new Savings account is available to Apple Card credit cardholders. Users must be over 18 years old and must reside in the US. Apple doesn’t charge any fees for its Saving account, which also has no minimum deposits nor minimum balance requirements.

Users set up and manage their Savings account directly from Apple Card in the Apple Wallet mobile app. The app also allows them to withdraw funds by transferring them to a linked bank account or to their Apple Cash card without having to pay any fees, make direct deposits to Apple Savings using an account number and routing number, and track their account balance and interest accrued over time.

Once set up, Apple Card spend rewards, called Daily Cash, are automatically deposited into the Savings account, allowing customers to earn interest on the rewards they get back from their credit card purchases.

Prior to the Savings account, Daily Cash rewards were automatically deposited into Apple Cash, a prepaid digital card held in the Apple Wallet app and issued by Green Dot Bank.

Advisory firm Crone Consulting estimates that US$3.8 billion is deposited into Apple Cash from the Apple Card each year, implying that these funds will now be moving into the Apple Savings account.

The 2023 US banking crisis

The rollout of Apple’s new Savings product comes at a time when US banks are struggling to maintain their deposit bases after a wave of bank failures shook the sector.

Silvergate Bank and Signature Bank, both with significant exposure to cryptocurrency, failed in March 2023 in the midst of turbulence in that market. Silicon Valley Bank (SVB) collapsed that same month after a bank run was triggered following the sale of its Treasury bond portfolio at a large loss, causing depositor concerns about the bank’s liquidity.

The banking sector further trembled this month after the FDIC took over failed lender First Republic Bank and sold the bank to JPMorgan. JPMorgan gained about US$92 billion in deposits from the deal.

Apple is one of the numerous tech companies that are taking advantage of the disruption currently faced by the tradition finance industry. Just last week, stock trading app Robinhood announced that it would be raising interest rates for its Robinhood Gold product to 4.65%, starting May 04.

Robinhood Gold is the paid premium membership offering of Robinhood, costly a monthly US$5. The program allows its members to earn interest on the cash they’re holding in their brokerage accounts, get larger instant deposits, tap lower margin investing rates and gain access to advanced market data as well as in-depth research from Morningstar.

Interests earned by Robinhood Gold members are paid out monthly and customers can track how much they’ve collected directly within the app. Customers can also instantly transfer funds from their brokerage account into their spending account to make purchases using their Robinhood Cash Card.

Apple is leveraging its massive user base of 2 billion active devices worldwide and strong brand to offer financial products and services intended to enhance the user experience, generate new revenue streams, and strengthen the company’s position as a leading technology and eventually a top financial services provider.

Some of the firm’s key financial services offerings include Apple Pay, a mobile payment and digital wallet service widely accepted at millions of merchants around the world; Apple Cash, a digital card and peer-to-peer payment service that lets users send and receive money in Messages and Apple Wallet; and Apple Pay Later, a buy now, pay later (BNPL) product launched earlier this year that allows users to split purchases into four payments spread over six weeks with no interests nor fees.

This article first appeared on fintechnews.ch