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Accounts mentioned in this post. Rates as of July 22, 2014

SmartyPig Announces Major Rate Cut

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SmartyPig

SmartyPig emailed its customers about an upcoming rate cut. Its savings account APY will be falling from 1.35% to 1.10% effective June 15th. I just confirmed this by calling SmartyPig. Everything else remains the same. Here's the contents of the short email:

Effective June 15, 2011, the interest rate paid on SmartyPig savings accounts will be adjusted.

The interest rate earned on balances* $0.00 - $50,000.00 will earn 1.095% (1.10% APY). The interest rate earned on balances* above $50,000.00 will earn 0.499% (0.50% APY). *Balances: For purposes of calculating balances for determination of the rate tier that applies, total balances of all goals within your SmartyPig profile will be aggregated.

Currently, there's no mention of this rate cut at SmartyPig's website or at its blog. The SmartyPig CEO used to openly write about the rate cuts at the SmartyPig blog. The last time this happened was in September. At least they sent an email before the rate cut. In January SmartyPig slashed the rate without any notification.

Last year SmartyPig changed its bank partner from West Bank to BBVA Compass. That change hasn't helped savers. It seems BBVA Compass has no intention of being a rate leader. This NYTimes Bucks blog post looked into this issue. It suggested that SmartyPig wants to focus on small savers who will use their savings to make purchases in SmartyPig's Retailer Gift Card program.

  Tags: SmartyPig, savings account

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Comments
8 comments.


Comment #2 by Lisa (anonymous) posted on
Lisa
Guess I'm moving it all back to Alliant - no point in maintaining multiple accounts for the same rate. Since I noticed the rate change goes into effect mid-month and they don't tally the interest until the end of the quarter, I ran a test. I was able to close my smallest goal, $25 interest, that I had deposited as a backup in case I needed to shuffle money around. They included the interest accrued to date even though the month is not up. I ACHed it, so we'll see how long it takes.

2
Comment #3 by Jo (anonymous) posted on
Jo
Had hoped you were going to post this, Ken. You fail to disappoint. ;-D  I knew that when SmartyPig was going to be acquisitioned by another bank institution the rates would start going down in leaps and bounds. It's what always happens.

I honestly thought SmartyPig was different. Doom on my naivete for thinking this.

4
Comment #4 by Lisa (anonymous) posted on
Lisa
Just a follow up - I initiated the transfer late Thursday, essentially Friday, and the funds were in my account Monday morning, so SmartyPig is crediting earned interest to date and not being slow about transfers.

1
Comment #5 by Lisa (anonymous) posted on
Lisa
I also thought I should share that the SmartyPig team has twice deleted comments I made on the SP blog about lowering the interest rate. I was polite and didn't use dirty words, but I was critical, which is apparently not allowed over there. They're making me gladder by the day that I'm pulling my funds!

1
Comment #6 by Anonymous posted on
Anonymous
Wanted to mention the challenge I have had closing my account.  As soon as this latest rate cut was announced, I decided to pull out all my funds.  Unfortunately, my original bank funding account was no longer open, so the process below was started.

1) Tried to ACH to a new account - no such luck.  Instead must open a new funding source and go through the verification process.  Okay, not too upsetting, as it is a good security measure.  Process took 3 days.

2) New funding account now created, but cannot close to a funding account unless there has been incoming activity.  Lovely.  I do a $5 funding transaction and wait for it to change from "Pending" to "Finalized".  Process took 3 days.

3) Okay, now I should be good to go right?  Wrong!  Even though the transaction has been finalized, Smarty Pig requires that the funds must wait 5 more business days to "settle" before I can do a transaction on those funds.  So now I wait for another 5 days.

So to close my account has so far required 11 business days to even initiate the transaction.  Grant it it is somewhat my fault for not having a current funding account, but I have never run into this type of challenge before.  Hopefully when this final "settlement" period is done, I will actually be able to get my money out of here.

2
Comment #7 by GregB (anonymous) posted on
GregB
I just had the same experience as Anonymous trying to close a goal that was funded by an account (Account#1) I have since closed. What was galling to me is that I do have an active funding account (Account#2) associated with other goals, yet it still required an incoming transaction on the goal I was attempting to close.

My work arround was to transfer money to a goal associated with Account#2 then close it. Unfortunately the system requires that you keep $25 in a goal. So now I need to wait over a week to get my last $25. Both email and telephone support said my only alternative was to transfer in $1 and then close the goal.

Very silly, time-consuming and frustrating. I certainly don't plan to put any new money into Smarty Pig after this experience.

1