Apple's recent move to increase interest rates on Apple Card savings accounts to 4.5% has prompted competitors to do the same. Cash App announced today that it is offering Cash App Savings customers “up to” 4.5% APY (Annual Percentage Yield). However, there are some caveats. Apple's Savings Account requires a customer to qualify for his Apple Card credit card, but Cash App otherwise limits high percentages to cardholders.
The company said that in order to increase the interest rate to 4.5%, customers must directly deposit at least $300 in salary each month. This can be more difficult for people who bank elsewhere but use his Cash App for peer-to-peer payments and business purchases. However, for those who are new to Cash App, it may motivate them to use this app as their main account in the future. (Without direct deposit, Cash App's rate is a less impressive 1.5%).
To earn the 4.5% rate, customers must also have a Cash App Card, use a personal (non-business) account, and be 18 years or older.
Image credits: cash app
To compete with other banks, Cash App also offers other benefits. For example, customers receive up to $50 in overdraft protection on Cash App Card purchases, free in-network ATM withdrawals and one free withdrawal per month at any ATM, and even access customer support from within the app. You can also call, the company says.
The news shows not only how Apple's entry into the savings market is forcing interest rates to rise to compete with other companies, but also how consumers are benefiting from the Federal Reserve's push to fight inflation. This is another example. Banks are also taking cues from higher federal funds rates.
At launch, Apple Savings Account came with a high APY of 4.15%, but Apple raised that to 4.5% last month. At the time, Apple's percentage was nearly 10 times higher than the national average.
Other fintech companies are following Apple's lead in attracting customers. For example, Step, another digital banking service, raised its interest rate to 5% following Apple's entry into the market.