Even at a time of severe economic crisis, several financial institutions are still offering good interest rates and APYs on their savings accounts, one of which is the recently announced Apple Savings account offering 4.15% APY. To compete with it, Step introduces its savings account with 5% interest rate annually. It aims to instill good saving habits, especially in GenZ millennials.
Step accounts offer customers the benefit of no monthly fees and no minimum balance requirements, provided they open an FDIC-insured savings account with a maximum limit of $250,000. However, in order to secure the 5% savings rate, users are required to establish a monthly direct deposit of $500 or more from their payroll provider or employer.
The intention behind the direct deposit requirement is to encourage customers to make use of the complete range of Step products. It should be noted that the 5% savings rate is not classified as interest, but rather as cash rewards that are directly funded and managed by Step, as stated by the company.
Step savings account offers various lucrative features. It has introduced an enhanced rewards program. Customers who qualify for the 5% savings rate will also earn triple points on purchases at select merchants, double points on restaurant dining, food delivery, and charitable donations, and single points on entertainment, streaming, and gaming.
Approximately one month following the launch of Apple savings account with a 4.15% interest rate, news emerges suggesting that other financial organizations and neo banks may have been motivated to bridge the competitive divide in the market. This is evident from the 4–4.85% APY range.
But Step claims that it has always strived to provide the most competitive interest rates in order to attract and retain customers, so the decision of Apple did not serve as a motivation for them to introduce a high savings rate.
Considering the current interest rate landscape, it is crucial to offer customers a return that closely aligns with the Federal Funds Rate. Thus, if situation demands, the 5% rate can also change to keep up with other institutions.
However, when an MNC like Apple introduces a similar product, you are bound to face the heat of the competition. Moreover, it’s also confusing for customers to make a choice between identical products by two popular companies.
Let’s take a look at the table below to understand the comparison between savings accounts from Step and Apple:
|Interest rate/APY||5% annually||4.15% annually|
|Minimum Average Balance||Nil||Nil|
|Banking partner||Evolve Bank & Trust||Goldman Sachs|
|Rewards||Earn triple points on purchases made at specific merchants, double points on dining at restaurants, food delivery, and charitable donations, and one point on entertainment, streaming, and gaming.||When customers use their Apple Card for payments, they receive cash back on all their purchases. By default, they earn 1% in cash rewards on all purchases, and 2% for purchases made using Apple Pay. Additionally, certain merchants offer 3% cash rewards on purchases.|
|Related App||Step App||Wallet app|
|Any necessary requirement||Users are required to establish a recurring monthly direct deposit of $500 or higher from either their employer or a payroll provider.||Users are required to be the owner or co-owner of an Apple Card.|
As you can see, both the accounts have similar fees and charges, however, the rewards and basic requirements are different. The most glaring difference is the APY offered on the savings account. Thus, you can choose one between them based on your necessities and preferences.
Step has teamed up with its longstanding banking partner, Evolve Bank & Trust, to offer savings accounts. With a substantial amount of venture-backed funding exceeding $500 million, including a recent round in October, the company boasts a customer base of over 4 million account holders.
Step introduces its savings account with 5% interest rate. Only time will tell whether or not it performs well in this field and stand out from the other savings accounts.