A little over a year ago, I introduced SmartyPig to Consumerism Commentary, a savings account with a higher rate. Their current rate yields 1.75%, by far the highest among high-yield online savings accounts. Accounts held with SmartyPig are fully backed by the FDIC. SmartyPig’s philosophy is designed to focus on goal-oriented saving, and the bank encourages redeeming (withdrawing) your funds only when the goal is reached, and preferably in the form of a gift card offered by one of several retailers partnering with the bank or of a prepaid debit card.
If you opt to redeem your account in the form of a gift card, SmartyPig offers a bonus above the value of the cash you have saved, but keep in mind that where legal, many of the gift cards “expire” if not fully redeemed after a period of time. Is the higher interest rate worth the hassle?
Updated October 13, 2010 and originally published April 1, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.