SmartyPig's Deposits Will Be Held by BBVA Compass
As I mentioned last January, the bank that has been holding SmartyPig deposits, West Bank, reported that it was planning to transition SmartyPig deposits to a larger bank. SmartyPig made the announcement this morning that the new bank will be BBVA Compass. Here are excerpts of the press release:
BBVA Compass and SmartyPig today announced a strategic alliance where BBVA Compass will serve as depository institution to SmartyPig’s customers in the United States and work with SmartyPig to expand their shared customer base.
[...]
“BBVA Compass is an important choice for us as it was one of the few banks able to handle the scale of SmartyPig’s considerable growth while quickly and seamlessly integrating our current customers,” said Bob Weinschenk, chief executive officer, SmartyPig. “In addition, the superior global brand recognition of the BBVA name is important given our ambitions for accessing the global markets. This strategic alliance also provides SmartyPig customers access to BBVA Compass’ broad array of innovative banking products and services.”
SmartyPig customers will receive notice today, June 7, via e-mail allowing them to choose whether to continue their SmartyPig accounts with BBVA Compass as their new bank. Customers who continue their SmartyPig accounts will authorize the transfer of their funds on deposit at West Bank to their new BBVA Compass savings account effective as of August 1, 2010.
The SmartyPig co-founder, Mike Ferrari, provided more info in the SmartyPig blog about how this change will affect SmartyPig customers. Here's an excerpt from his blog post:
On August 1, 2010, with your permission, SmartyPig and West Bank will securely transfer your customer data and funds on deposit in your SmartyPig savings account from West Bank, our current bank services provider, to BBVA Compass. In order to keep your SmartyPig account active and your savings goals current, you must log into your account and authorize this transfer of funds and the opening of a BBVA Compass savings account. Please note that your funds will remain FDIC insured at all times to the fullest extent provided by law.
I don't see any indications how this may affect future interest rates. I would guess the negotiations with BBVA Compass had been taking place for the last several months and might have been part of the reason for last month's rate tier changes. If that's the case, perhaps the current rates will last for a while.
For those not familiar with SmartyPig, its savings account currently pays 2.15% APY on balances up to $50K. It's not a typical type of savings account. I have more details about SmartyPig in this December review. To see all of my previous posts on SmartyPig, please refer to our SmartyPig rates and reviews page.
Anonymous - #1, Monday, June 7, 2010 - 6:52 PM
Seems like an awefully dumb time to link up with a Spanish bank, but then again SmartyPig is an awefully dumb thing.
Anonymous - #2, Monday, June 7, 2010 - 7:14 PM
If the bank is FDIC insured who cares where it is based?
Anonymous - #3, Monday, June 7, 2010 - 7:42 PM
why is SmartyPig a dumb thing? it has the best saving rates for under $50K
Anonymous - #5, Tuesday, June 8, 2010 - 6:46 PM
I'm a Smartypig acct. holder and I'm MAD about one thing. When I got email about the bank change, went to Smarty website, logged to my acct. BUT UNLESS YOU GIVE THEM AN IMMIDIATE ANSWERT AS FAR IF YOU WANT TO STAY WITH SMARTY OR NOT, YOU CAN NOT GET ANY INFO. ABOUT YOUR ACCT.AS FAR AS BALANCE ETC... THEY COMPLETLY SHUT US DOWN ! NOT ABLE TO DO ANYTHING IN OUR OWN ACCT., TILL YOU GIVE AN ANSWER, EVEN THOUGH THEY SAID THAT THEY NEED AN ANSWER BY 7/19/2010 AND THE CHANGE TO THE NEW BANK WILL TAKE PLACE ON 8/1/2010. I CALLED AND WAS TOLD THAT IF I CAN NOT MAKE UP MY MIND NOW, I CAN MARK THR NO BOX, THIS WAY I CAN CHECK MY ACCT. AND IF I CHANGE MY MIND I CAN ALWAYS OPT IN AGAIN AND STAY WITH SMARTYPIG.
To me it is a lousy way to do businees--shut you down unless an answer is given right away. I FOR MYSELF DECIDED TO CLOSE MY ACCT. WITH SMARTY, DON'T CARE HOW MUCH INTEREST THEY'LL GIVE ME. IT IS SIMPLY A LOUSY WAY TO CONDUCT BUSINESS !!!
najdorf (anonymous) - #6, Tuesday, June 8, 2010 - 9:37 PM
I'm also pretty dubious of European banks coming into the US market this way (I realize BBVA and Santander began this process a while back). If BBVA is paying for a batch of high cost, low denomination deposits far from their main territory, they may be in more trouble than has been reported with respect to their liability structure. Generally I'm skeptical of any high-rate deposit deal unless it's from a small local bank or credit union in my area that has to fund that way because they aren't big enough or well-known enough to access credit markets. Think about the large U.S. banks that had nice deposit deals - WaMu, Wachovia, etc - all gone. If BBVA loses some of these deposits by mismanaging the transition (as it sounds like they're doing) and continues to have a hard time issuing commercial paper, there may not be a BBVA in a few years. Of course so long as you're FDIC insured maybe it's no problem, but SmartyPig seems like the sort of structure (depositing into a small bank that deposits into a U.S. subsidiary of an international bank) that might leave your money illiquid and/or not earning interest for a while if the something goes wrong.
Gaelicwench - #7, Wednesday, June 9, 2010 - 11:33 AM
Uh, I don't think I need to go postal over all this. I'm sticking with this Piggy bank over the long term; I figure there's nothing wrong with giving the benefit of the doubt. Ferrari stated that the rate wouldn't change....I'd like to hope!
Time will tell, eh! Jo
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