SmartyPig Cuts Rate From 1.75% To 1.35% APY

In an email to customers, savings site SmartyPig announced it had cut its rate from 1.75% to 1.35% APY. Now it’s no longer the top rate for a nationally available online savings account. Sad day.

Reached for comment, SmartyPig’s President and Co-Funder Jon Gaskell told Consumerist that they’re, “not impervious to market conditions. As rates begin to rise, and we are really hoping they will, the rate offered to SmartyPig customers will continue to rise.”

If you’re a rate-chaser, you might want to check out this list of savings accounts rates for January, ranked from high to low.

The site is still pretty cool for the ability to set savings goals and the slew of ways it can plug into your social network. You’re just not gonna get that top-drawer rate anymore.

It’s hard to be a saver these days!

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  1. Blueskylaw says:

    When banks can borrow at essentially 0% – 0.25% why should they pay depositors 1.75%?

    • Bsamm09 says:

      True. I own plenty of common and preferred stocks that pay a lot more and taxed lower (15% v Marginal). Riskier than savings but if you want more return you need to accept more risk.

      • Coelacanth says:

        Agreed. I moved about a third of my savings into dividend-paying stocks last year, and considering upping that ratio to about 50% of all new money previously earmarked for savings.

        There’s almost no incentive to have a sizeable sum of money parked away in a savings account that pays almost nothing – except for the extremely risk adverse.

        • Bsamm09 says:

          Look at REM pays about 10% Div. It’s also grown about 9% since I bought but remember risk v reward.

          • TexasP says:

            Ditto. General Electric pays 3% and hasn’t missed a dividend in more than 100 years. Merck pays 4.1%. You can’t get a more conservative stock investment than those two.

  2. Grungo says:

    Yikes. Sad day indeed. I signed up for SmartyPig only about 15 months ago, and it was paying 2.25% back then. Tiiiiime to go shoppin’.

  3. theblackdog says:

    I am not surprised, they aligned themselves with BBVA Compass and they are really cheap with savings account rates for the normal banking products.

  4. PSUSkier says:

    Yeesh. My CU is still coughing up 2.5% APY

  5. pbj_sushi says:

    I’m surprised Consumerist had no commentary about how ticked off users were that they quietly changed the rate without telling account holders (when every time previously they sent an e-mail notifying us of changes to our accounts). The referenced e-mail was generated in response to this outpouring of customer irritation – it was an apology AND a notification.

    Text from the e-mail as follows:

    “The interest rate paid on SmartyPig savings accounts with $50,000 or less in aggregate balances has decreased to 1.35% APY (balances of more than $50,000 will remain at .50% APY) as of Jan. 3, 2011.

    Rate adjustment notifications are always listed in bright red as an alert notice when you log into your account. However, we received a number of requests from customers over the past couple of days stating that any future rate adjustments be communicated in advance via email.

    We agree we could have done a better job communicating this, and we are now committed to advanced notice via email prior to any future rate adjustments. Thank you for your business.

    Sincerely,
    Mike Ferrari, SmartyPig co-founder”

    I joined SmartyPig a few years ago when the interest rate was 3.95%. Obviously it has changed many times since then, and every time there was an e-mail far in advance (like a month) notifying me that it would be changing.

    When they partnered up with BBVA, I was worried the company would go downhill – it appears they are. It’s very sad.

  6. beoba says:

    I used to recommend Smartypig because of its high rate, despite the hassle of setting up the gimmicky goals and the lack of normal savings features like direct deposit.

    Now that the rate is mediocre, I’d recommend going elsewhere.

    Oh, and keep away from their debit card and giftcards. They’re both fee-laden shams.

  7. UnicornMaster says:

    I remember when I used to get 5.5%

  8. sufreak says:

    I’m a big fan of Smartypig and have been using it for almost 2 years if not more. This is natural with the economy and frankly, the goal service is worth it.

    I use them for the budgeting feature, not for the interest.

  9. Jim says:

    I’m mixed on this one. It’s right in line with Discover, Amex, etc… but is still higher than ING Direct. I don’t use SmartyPig as a savings account, I utilize their gift card features to save for specific items. Some of their retail partners offer pretty hefty percentages on top of the rate you earn as a “savings account.” Yes, there are fees, but they aren’t awful ($2-and-something to do a gift card, or any combination of gift cards from different vendors.)

    I like their philosophy, how they want their customers to understand the concept of saving for something in a methodical manner (rather than just charging it) and the ability to allow family, friends, FB pals and others to chip in for your goals. It does the math for you up front when you set up a goal, so it’s literally a “set it and forget it” arrangement.

  10. TexasP says:

    Teaser rates are standard operating procedure for savings accounts. Loudly offer a higher initial rate than the competition, then quietly lower it later.