Apple’s ‘Goodwill Credit’ For Apple Savings Could Cost $200 Million

OBSERVATIONS FROM THE FINTECH SNARK TANK

Last month, the Wall Street Journal reported that some Apple Card Savings account holders experienced issues moving money out of their Apple savings account to an external bank account.

In an effort to placate disgruntled customers, Apple announced this week that it would offer a $100 “goodwill credit” to affected account holders. According to 9t05 Mac, Apple notified “at least some” of the Apple Card Savings Account users affected by the delay. The email said:

“The experience we provided for a withdrawal request you made for your Savings account in May did not meet our standards. Thank you for your patience while we completed our internal reviews. We are making a one- time goodwill credit of $100 to your Savings account as a courtesy to you for this experience. You will see this deposit in Wallet as Adjustment-Credit.”

To prevent future issues, Apple notified customers that ACH transfers take up to three business days to process, and that the processing time, doesn’t include the time it takes for the money to move to the external account. Apple also changed how it calculates maximum balances for Apple Card Savings Accounts.

Goodwill Credits Could Cost Apple $200 Million

9to5 Mac reported that Apple notified “at least some” of its savings account customers. How much is “some”?

A recent study from Cornerstone Advisors sheds some light on that question, and on what the goodwill credits could ultimately cost Apple.

Cornerstone’s survey—fielded in the last week of June—identified 515 Apple Card holders. Of those cardholders, 59% said they have opened an Apple Savings account. Among the Savings accountholders, three-quarters indicated that they tried to move money out of the account, and 60% of them had trouble doing so.

So how much will the goodwill credits cost Apple? Well, that depends on how many Apple Card holders there are.

Based on a consumer survey fielded at the beginning of 2022, I estimated that 6.4 million consumers held an Apple Card. With the newer survey in hand, I’m not ready to publicly update that estimate, but it’s reasonable to believe that—given the aggressive marketing push Goldman Sachs and Apple have done in the past year—that the number of cardholders has grown to 7.5 million to 8 million.

So let’s do some math (don’t worry, I’ll do it). Assuming 7.5 million Apple Card holders, if 59% have an Apple Savings account, that’s 4.43 million accounts. If 76% of them tried to move money out, and 60% of them had trouble doing so, that means 2.018 million account holders had trouble moving money out.

At $100 per Goodwill Credit, Apple could be on the hook for $200 million in credits.

The Question Nobody is Asking

Among the reports in the press about the trouble Apple Saving account holders are having moving money out, none of them are addressing the following question: Why are Apple Savings account holders moving money out?

The fintech world went gaga back in April on the news that the Apple Savings account attracted nearly $1 billion in just four days.

Based on Cornerstone’s data, however, a huge percentage (76%) have already tried to move money out of the account. So how much of that $1 billion has Apple already lost?

Experienced bankers aren’t surprised by any of this. They knew that the money going in to the Apple Savings account at 4.15% was hot money, so it’s certainly not surprising to them that money was moved again when those consumers found even higher rates from other providers.

Or, I should say, that those customers tried to move that money.