When SmartyPig was first initiated a few years ago, it received great reviews and was believed to be a great, unique way to save money. Just a few months ago, SmartyPig dropped their rate by 40 points which has caused people to question some of their decisions decisions over the last 12 months. Well, SmartyPig is at it again with another rate drop.
Last week, SmartyPig announced a another rate drop of 40 points, which brings their interest rate down to 1.35% APY. Don’t be surprised if you didn’t hear about their new rate because many account holders didn’t hear of it either. Apparently, this time around they made the change and kept this news on the hush hush. Back in September was the first rate drop, again of 40 points, but that information was well publicized and reported in detail on the SmartyPig blog. Evidently, the reasons for the drop this time around are economic related which raises some eye brows considering the SmartyPig business model has always had very little to do economics and more to do with gift card conversions. It looks like SmartyPig has changed their tune.
SmartyPig moved from the small West Bank to the much larger BBVA Compass and since has made their rate changes. It’s a sure bet they are receiving pressure from the FDIC to reduce the high interest rates of SmartyPig, unfortunately for consumers that results in a poor online bank offering one of the higher interest rates available. They are no longer the highest, but still comparable when you look at the available high interest savings accounts around today.
If you have money in SmartyPig (less than $50,000), it might be time to consider other options. While, 1.35% is still one of the highest APY’s around however the SmartyPig interface, deposit options and funding requirements / monthly goals might not be worth all the hassle. When SmartyPig was 80 points higher than everyone else, dealing with all the extras might not have been a big deal, but now that they’re almost level with the likes of American Express, Discover and Sallie Mae. Having to develop a savings goal and not be able to get your money until you meet the goal, might just not be worth the time and energy anymore.
I’ve been hearing a lot about Smarty Pig here recently! I definitely will check it out. Thanks for submitting this article to the Best of Money carnival this week!