SmartyPig Increases Interest Rates!

As if I didn’t love SmartyPig enough.

I got an email yesterday letting me know that my interest rate was changing. I got a little nervous, thinking that all good things must come to an end. But then, something amazing happened. They’re actually increasing the interest rates on May 19th!

Ok, so now I’ll have a bank that gives me 2.15% interest. That just makes my decision to move my savings from ING (which currently gives 1.10% interest) even better!

If you already have your money in a savings account, you should definitely switch. Why?

Well, if you make 1.10% on your account, then you obviously value that 1.10%. And if you like that 1.10%, wouldn’t you like another 1.05%? It sounds like a no-brainer to me.

How often does someone offer to double your money at no cost?

I’m pretty pumped about this because while 2.15% isn’t a huge amount, it gets me that much closer to the 2.9% interest I’m paying on my student loans. Of course, the interest rates will rise on the loans too eventually, but the smaller the margin, the less I’m losing on the student loan interest (plus it’s tax deductible!).

If you haven’t had a chance to check them out, read my review of SmartyPig and find out why I think they’re the greatest.

I haven’t even mentioned the bonus you can get when withdrawing part of your money onto a gift card of many popular retailers.

Readers, Do you guys use SmartyPig? Why or why not? Is the hassle of adding another bank too much to outweigh the benefits?

11 Responses to SmartyPig Increases Interest Rates!

  1. Love the interest rate. I’m really going to have to investigate this further. I bank with CapOne and their rate is just a little above 1%. Thanks for the heads up!

  2. We use Chase as our brick & mortar bank for actual checks, ING Direct as our checking account and very short term savings goals (like our Fun Money accounts), and Smarty Pig for our Emergency Fund and everything else.

    I was also surprised when the email said they were increasing their rate instead of going the other way! Woot!

    • Daniel says:

      @Budgeting in the Fun Stuff, What a relief! I was sure the party was over. One of the small things about SmartyPig that I kind of like is that they only deposit interest quarterly, but that means nice little sum gets deposited each time instead of a few dollars a month! It makes no difference, it just feels good.

  3. Money Funk says:

    That is pretty cool to see rates go up! While not a lot, its a great sign of things to come.

    2.9% on your SL? Cool beans. Beats my 3.4%.

  4. cm says:

    They are only increasing the rate to 2.15% for amounts under $50,000. For anything over that, they are actually massively DROPPING the rate to a paltry 0.50%. They got a lot of angry complaints on their blog about this, and in particular that they “spun” this to seem like it was a rate increase.

    Keep in mind, if you have say 50,000 saved in SmartyPig (and all that then can benefit from the 2.15% interest), the difference between their old 2.01% and this new 2.15% APY on that $50,000 amounts to…a whopping $70 a year more interest.

    Whereas for those customers who had, say, $100,000 in SmartyPig, they are now going to LOSE $1,185 in interest!

    So I think they should have advertise this as what it is: a major drop in interest payouts to their serious savers.

    • Daniel says:

      @cm, That’s a good, point, there is a drop for those with a lot of money in their accounts. It doesn’t affect most of us much.

      However, SmartyPig doesn’t claim to be a “normal” bank. Their shtick is about goal setting and being able to withdraw money in creative ways, so I don’t think they’re being dishonest in the way you allude to.

  5. I roll everything into 5-7 year CD’s each tranche of money I get. Why not do the same? My blended rate on my cash is 5.2% right now.

    • Daniel says:

      @Financial Samurai, That’s an awesome rate. I don’t feel comfortable putting my emergency savings in medium-term CD accounts, though. If I could, I would use p2p lending and invest in some A and B notes vs. a CD, though. Damn DC for not letting me!

  6. Daniel-san, were you ever able to read “The DVD Method To CD Investing”? I think perhaps once you read that, you’ll want to follow along. Let me know if you haven’t, and i’ll guide you to it. I’m very serious about this method in low and high interest rate environments.

    • Daniel says:

      @Financial Samurai, Just read it. My only problem with is that you say that you won’t need the money once you’ve built up an emergency fund. CDs are great, but once I have my emergency fund set up, why not put that money to better use and earn a higher rate of interest using stocks or p2p lending.

      One thing I would do, though, is put part of my emergency fund into CDs. If I REALLY need it, then 6 months of interest is probably the least of my worries. Right now though, I have 3-4 months of expenses saved up in my emergency savings, but that’s so little that it’s not even worth putting it in a CD. I would only gain an extra ~70 a year.

  7. Would you put several hundred thousand dollars into P2P lending? Anybody who put money in over the past month is hurting after today.

    It’s all about saving the big nut, which you can rely on the interest income to use if you need it.

    Trust me on this one. You can invest in this and that, but at the end of the day, if you’ve got a big nut earning 4%, that should be good enough. If you have $2 million in a 5 yr CD for example, you can earn $80,000 a year at 4% guaranteed doing nothing. Not bad.

    Best, Sam

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