SmartyPig just announced the largest rate cut since it was launched in the Spring of 2008. Effective Monday, August 17, 2009, the SmartyPig savings account rate is scheduled to fall from 2.75% to 2.01% APY. Michael Ferrari, co-founder of SmartyPig, gave the bad news yesterday on the SmartyPig blog:
Beginning Monday, Aug. 17, we will be reducing our APY to 2.01%. Historically, we've initiated less-frequent drops so as to enable our customers to earn as much interest for the longest possible amount of time rather than knock 10 or 20 basis points off here and there. ...
I have SmartyPig's rate history in my last SmartyPig review. As you can see in my last weekly rate summary, SmartyPig's 2.75% APY was the top non-promo rate. The next highest non-promo rate was Tennessee Commerce Bank with a 2.30% APY for balances up to $100K (1st Constitution just cut its standard rate to 1.95% APY). The new 2.01% APY keeps SmartyPig competitive but it's in the same ballpark as several other savings accounts.
As we've seen over and over this year, it doesn't take long for any nationwide rate leader to be forced to cut rates or to restrict availability. At least SmartyPig doesn't try to hide its rate cuts or play games by creating new accounts while slashing rates on the old accounts.
Please refer to my last SmartyPig review for more details of the SmartyPig savings account.
Thanks to the readers who emailed me news of this rate change.