When SmartyPig was first launched a few years ago, everyone, including myself thought it was the greatest thing since sliced bread.? Not sure why people use sliced bread in the cliche but so be it.? Anyway, over the last 12 months, SmartyPig has made some extremely questionable decisions and after an interest rate drop of 40 points just a few months ago, SmartyPig is at it again.
Last week, SmartyPig announced a rate drop of 40 points, bringing their interest rate down to 1.35% APY.? If you’re a SmartyPig account holder and didn’t hear about this rate drop, you’re not alone as this time around, SmartyPig kept things nice and quiet.? Their first 40 point drop in September was well publicized and written about extensively on the SmartyPig blog.? Reasons for the drop were said to have been economic related even though the SmartyPig business model has little to do with economics and more to do with gift card conversions.
But all of that changed when SmartyPig moved from the small West Bank to the much larger BBVA Compass.? No doubt, the FDIC levied pressure to reduce the high interest rates of SmartyPig and what you have left is a very poor online bank offering one of the higher interest rates available.? No longer the highest, but still comparable when you look at the available high interest savings accounts around today.
So what does interest rate drop mean to you?? Well if you have money in SmartyPig (less than $50,000 of course), you’ll want to consider moving your money elsewhere.? 1.35% is still one of the highest APY’s around however the SmartyPig interface, deposit options and funding requirements / monthly goals can now be considered a hassle that is not worth the interest.? When SmartyPig was 80 points higher than everyone else, a few small hurdles were to be embraced but now that they’re almost level with the likes of American Express, Discover and Sallie Mae, those hurdles make SmartyPig less attractive.
If you don’t have money in SmartyPig right now, keep a close eye on what they do in the next few months as I expect more big news coming from they’re camp.? They haven’t disappointed with new developments over the last 12-months and I fully expect a new line of products to be on their way and/or another rate drop before the second quarter is out.? SmartyPig is FDIC insured, so you’re money is always safe but as of last Monday, it’s not earning as much interest as it used to.
