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The money in Apple Card Savings accounts just got more valuable.
Image: Cult of Mac

The interest rate earned by cash stored in Apple Card Savings accounts increased on Tuesday, reversing a trend of declines in previous months. Money in these accounts now earns 3.5% in annual interest.

The bank behind the savings account is responding to changes in the U.S. economy.

Apple Card Savings annual interest rate: Now at 3.5%

Money earned from Apple Card’s cash-back program can automatically go into a high-yield savings account that’s currently managed by Goldman Sachs. Plus, users of Apple’s credit card can easily transfer cash from other accounts that pay a lower interest rate.

The Apple Card Savings APY was once way up at 4.5%, but a series of rate cuts starting in 2024 gradually brought it down. The rate now sits at 3.5%. Still, the rate increase on Tuesday jumped it up from 3.4%.

Following the Federal Reserve’s lead

To combat high inflation after the Covid-19 pandemic, the Federal Reserve aggressively raised its benchmark interest rate. Because borrowing money became expensive, banks were willing to pay customers a high APY to keep cash with them. But then the Fed began cutting interest rates. When the Fed lowers rates, banks typically respond by lowering the rates they pay on savings accounts because they earn less from lending money.

That trend reversed on September 16, when the Fed increased the federal funds rate by a quarter percentage point, bringing its target range to 3.75% to 4%. It was the central bank’s first rate hike since 2023, as Fed officials cited inflation that remains elevated.

Higher benchmark rates can put upward pressure on the interest rates banks pay on savings accounts, although the Apple Card Savings rate is set by Goldman Sachs and can change independently.

A solid investment

At 3.5%, an Apple Card Savings account earns significantly more than a traditional brick-and-mortar bank account, which typically pays a meager national average of around 0.4%.

The rates given reflect annual percentage yields. And Goldman Sachs compounds interest daily. So now $100 in an account earns $3.50 a year. Or put $10,000 away and earn $350 each year. The money is divided up monthly.