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SmartyPig Raises Interest Rate Today

This article was written by in Banking. 18 comments.


In March, I opened a savings goal with SmartyPig, and I’ve been sending $172.20 from my ING Direct account every two weeks since then. My savings goal is to expand my collection of photography equipment to include a full-frame digital camera. I originally identified the Canon EOS 5D Mark II as my planned purchase, but rumors are pointing to the Mark III possibly being released next year.

Regardless of what I choose to purchase, or even if I decide I need to withdraw my funds an leave it in a bank account earning interest, SmartyPig will now help me reach that goal faster. The bank has increased its interest rate from 2.01% to 2.15% APY. This rate soars beyond practically every savings account, and as long as you have less than $50,000 total at SmartyPig, across all savings goals, this is the rate you will earn.

If your total balance is above $50,000, you will earn a lower rate of 0.5% APY.

SmartyPig is a bit different than a typical savings account. The bank wants you to keep your money deposited until your goal has been fulfilled. Although you can withdraw all of your money by closing your goal, you cannot withdraw part of your deposit without some maneuvering. Make sure you read these details to understand the limitations when comparing SmartyPig with a typical savings account.

Are you saving with SmartyPig? What is your saving goal and how do you like the account?

Updated October 13, 2010 and originally published May 19, 2010. 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.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 18 comments… read them below or add one }

avatar Jon Gaskell

Flexo, thanks for the mention! One quick correction: If your total balance is above $50,000, not, $25,000, you will earn the lower rate of 0.5% APY. Anything up to $50,000 earns 2.15% APY. Good luck with your goal!

Jon Gaskell, President SmartyPig

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avatar Luke Landes ♦127,535 (Platinum)

Thanks for the correcftion, Jon. I’ve updated the information.

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avatar cm

You’ve added a new sentence but you still left one in that says, “s long as you have less than $25,000 total at SmartyPig, across all savings goals, this is the rate you will earn”, which is wrong. A strike-through would be apt.

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avatar York

The 2.15% is a great rate, but the $50K limit makes it not worth setting up a seperate account if you have over that amount. The 0.5% rate over $50K is not even close to being competitive to others such as CapOne or Discover. I’d love to see them raise the limits, which would make me move my $ immediately.

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avatar Lynn

I have been considering opening a Smarty Pig account since we are saving for a trip to Disney but I wasn’t sure whether it was a hard or soft credit pull so I have held off. Do you know if they do a hard credit pull? Also, can you open up multiple sub-accounts like ING or is it just one account?

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avatar Luke Landes ♦127,535 (Platinum)

You can start multiple goals, somewhat akin to ING Direct’s sub accounts. SmartyPig does only a soft credit pull for identification purposes, not a hard credit check.

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avatar Lynn

Thanks…I am going to open my accounts today! Awesome!

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avatar Lynn

Is there any bonus/referral program that I could use?

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avatar Holly

Love SP…I have 5 different short-term (1 year) personal savings goals (i.e., property taxes and insurance deductibles) as well as my children’s graduation accounts (gifts they will be able to spend or save upon graduation from college). Love watching the accounts grow!

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avatar Lynn

Holly – I have my kids accounts at ING but am going to move them over to Smarty Pig! Thanks for the idea.

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avatar Monika

The only problem with smartypig is that they only pay interest quarterly, not monthly. So you have to make sure you withdraw right after they pay the interest, or you could miss out on a month or two’s worth. I’m still probably going to put something in there though.

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avatar Holly

Not sure about that…I think I investigated this when opening an account w/SP.

I believe interest still accrues up to the point of withdrawal and you do earn the up-to-date interest. The downside of interest only posting quarterly is that you don’t earn interest on your interest until it posts (if you understand what I mean…you lose a little in the compounding factor); Anyone out there care to elaborate or to explain more precisely?

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avatar Lynn

Interest is accrued daily but just posted quarterly according to their website…I would love to see a calcuation on how this affects a deposit of say 10K vs saving at 1% at ING that accrues daily but posts monthly…

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avatar Luke Landes ♦127,535 (Platinum)

Lynn: There is no difference. Interest at SmartyPig and ING Direct both compound interest daily, so you earn interest on a higher balance every day. The frequency of posting is only relevant if you earn interest and close your account before it is paid. In SmartyPig’s case, they will credit your earned interest no matter when you close your account, but this not true of all banks. I understand that ING Direct will also credit your accrued but unpaid interest when you close an account.

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avatar Michael Ferrari

Holly,

Just wanted to jump in here quick. You are correct. Interest accrues daily and is paid to your account quarterly. If you close your goal before interest is credited you will receive the accrued interest.

Mike Ferrari, SmartyPig co-founder
@mferrari

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avatar Barb

I’ve set up a SmartyPig account to save for an upcoming trip. My only issue was with the end date for the goal and the automatic calculation of monthly payments. I figured I wanted to put away around $50 a month, and supplement it with money from gifts, side jobs, etc., to make it to my goal in time, but I couldn’t do this within the system. I wound up setting an end date for the goal well past the actual goal to make the monthly payment equal around what I wanted it to.

Happily, I’m about a quarter of the way there, and have been saving for about 6 months! (I think my official goal date is something like 2015, when, in fact, it’s actually next August.)

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avatar Financial Samurai

It’s not bad if you have under 50K, but one poster is right… only 1.65% for over 50K is not that great. For the cash you don’t need, I’d highly consider looking at 4% yielding 5-7yr CDs. It’s the DVD method to CD investing!

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avatar SavingEverything

This SmartyPig product seems to be a very good savings account from West Bank. imho, putting your goal on the retail card (with their % “cash boosts”) is not worth it. Because of the float; from the day you put your goal onto the retail card to the day you receive it in the mail and go shopping. No interest earned during that time. And, sometimes, my credit card gives a better % cash back or bonus % cash back for items shopping at the credit card’s own shopping retailer mall. Plus, it’s not clear to me if the cash boosts are reported as interest income? And, using credit card allows you to still have your goal amount earning interest until your credit card statement’s pay in full due date.
For my credit card, ii can get 1.25% cash back + 3%bonus cash back by shopping online at bankofamerica additup program at Staples. The only attraction with Piggy…amazon..4% and macys..12% !

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