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SmartyPig Raises Interest Rate, Adds Tiers
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If you have a savings account at SmartyPig, you’ll be happy to learn that in a month they’ll be increasing the interest rate on those accounts. It’s a variable interest rate with two tiers that applies to your aggregate goal totals. If your balance is less than $50,000 then the rate will increase from 2.00% APY to 2.15% APY. If your balance is over $50,000, you will earn 0.50% APY. If you aren’t familiar with SmartyPig, here is my SmartyPig review.
Update: Originally I erroneously wrote that there were interest rate tiers, there are not. If your balance is under $50,000 you earn 2.15% APY on everything. If your balance is over, you earn 0.50% APY on everything.
In banking terms:
*Effective May 19, 2010:
· Interest rate earned on balances $1 – $50,000 will earn 2.133% (2.15% APY)
· Interest rate earned on balances above $50,000 will earn 0.499% (0.50% APY)
Ken at Bank Deals also covered this story and has a few guesses at why SmartyPig increased the rate. My guess is that, based on their business model, they’re trying to get more deposits so more goals are met and converted into gift cards, where SmartyPig earns a commission. What’s the best way to get people to save more? Increase the interest rate.
In the press release, they also shared some savings statistics that were much higher than I expected. They’ve had more than $400 million in goals created and $150 million in goals reached in the United States, both numbers are much higher than I expected. They also claimed to have the best savings interest rate, which also appears to be accurate at the moment for savings accounts that are not reward checking accounts.
It’s great to see SmartyPig do well, you can’t knock a company that is trying to get people to save more money, but it’s a little sad to see that 2.15% APY on a savings account is big news these days.
(Photo: ginza-lina)
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Look at what inflation is. That “pitiful” 2.15% APY is about par with the 5% or 6% with 3% – 4% inflation.
Yeah I know, that is said that such a low rate is such big news. There is an ad on the radio that is for a bank advertising CDs at a 1.5 APY. They say how this rate would make your money feel like it’s in “paradise”.
Wait a min! Is that .49% ON TOP of the 2.15? or is that a typo?
Most banks – the more you have the more interest you get.
It’s 0.5% total, not in addition to the 2.15%. I agree it’s kinda backwards compared to some banks, but it’s similar to rewards checking accounts.
sigh. one day there will be high interest rates again…one day.
If you go back to the 70′s, they were paying mid teens on CD’s.
Oh, by the way…
Unemployment was double digits
Inflation was double digits
There were wage and price controls
Mortgage interest got up to 18%
Credit Card interest exceeded 30%
The Fed rate was in the high teens
Yeah, oh for the days when they paid higher interest.
Bill Snider
Forgot to mention..
You had to pay for your checking account
There was a war in Viet Nam
President and Vice President resigned
We hasd rioting in the cities
The stock market dropped 55% in two years
So on, so on, so on….
Bill Snider
Its sad to say that 2.15% is a pretty decent rate. I’m glad my rewards checking is still paying more than 2.15%.
Yeah, these days banks want more of your money. Otherwise, they’ll never make their bonuses. It seems that credit unions and small banks are where it’s at these days.
2.15% is a heck of a lot for an FDIC-insured account in the days when big banks like BOA are paying .1%
Yeah it is mighty depressing to awe over a .15% increase when you need to put $50,000 in to get it.
It’s actually the opposite; you get the higher rate on balances UNDER $50,000.
I think people are a little confused about the interest rates. What the Smarty Pig announcement says is that you’ll get 2.15% for the first $50K and 0.50% for every dollar above that. It’s basically a way of forcing people to make their savings goals under $50K (and an attempt to generate more revenue from those gift cards). It also reduces the bank’s liability. Works the same way w/ rewards checking accounts. Mine gets 3.5% for the first $25K and 0.25% above that amount. I’ve never seen any that will give you the high interest rate on an unlimited balance.
I think I will be opening an account with Smarty Pig in the near future. 2.15% is great in this market.
The rate has dropped to 1.75%.