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SmartyPig is No Longer Relevant

by Ryan Guina

Like many other people, I was intrigued when SmartyPig launched – they offered interest rates which were substantially higher than virtually every other bank on the market. Unfortunately, it was unsustainable. SmartyPig recently dropped their interest rates again and while their current interest rate of 1.10% APY is still near the best you can find, the limitations and constraints on their accounts have made their bank obsolete for many.

SmartyPig is No Longer Relevant

SmartyPigI was sad to see the latest interest rate drops at SmartyPig. Not just because my savings would earn less interest, but because it means that SmartyPig has completely changed, and in my opinion, has moved away from their beginnings. When SmartyPig started, they offered the highest interest rates by far. But before long they placed a $50,000 cap on savings which would still earn the highest interest rate. The cap makes sense – as the high interest rates were a loss leader in a sense.

Then their mission changed. When SmartyPig was acquired a few months ago by BBVA Compass, it seemed like their was an increased focus on spending money instead of saving money. The entire premise behind SmartyPig when it launched was saving money. Customers created savings goals and had to leave the money in their goal until they either reached the goal or  closed it and transferred the savings to another goal. SmartyPig then offered customers discounted gift cards for redeeming their savings.

Somewhere along the way SmartyPig launched a prepaid cash rewards debit card. The card offers savings of up to 10% cash back from certain retailers*, so there is certainly value there for consumers. But the prepaid nature of the card means it must first be loaded, then spent. It isn’t tied directly to your account in the sense that making a purchase withdraws money from your savings. So you transfer money you want to spend onto your prepaid debit card, that money no longer earns interest while it is on your card, and you periodically have to reload your card when your balance runs low. It’s a bit of a hassle compared to other forms of payment, but might be worth it if you are willing to put up with the juggling act.

*The cash rewards of up to 10% on purchases is for select local and regional retailers. I recommend researching which retailers offer discounts near you before signing up as there may or may not be many near your location.  wasn’t able to find enough retailers near me to justify the hurdles of using this card compared to the cash rewards credit cards I use.

What SmartyPig is Still Doing Right

To be fair, it’s not all doom and gloom for SmartyPig. They continue to excel in their use of social goals and social funding. You can create a public goal and other people can help you fund it. For example, you might have a child who is saving for a big purchase, and you can put money into their account, as can the child’s grandparents or aunts, uncles, etc. It is a fun and convenient way to publicly track goals. It does however, take a little work setting this up, and it requires work on the part of others, which creates a barrier to entry.

Beyond SmartyPig – Best Banking Options

If you simply want the highest interest rate, then SmartyPig is still near the top of the game. However, their top interest rate is only good for savings of up to $50,000 and their system isn’t the most user friendly for people who want to use their account for a lot of transferring in and out to separate bank accounts, or if for people who want to use it as their primary savings account. As such, I’ve decided to move all my money out of SavingsPig and transfer it to Discover Bank, which earns a comparable interest rate, but is also more user-friendly. Here is a list of other online high yieldsavings accounts which offer some of the best interest rates in the nation.

Rewards cards. I personally prefer a traditional credit card or debit card compared to a prepaid debit card, as their are easier to manage and offer more flexibility. If you want to earn rewards on your spending, then get a cash rewards credit card or use PerkStreet Financial’s cash rewards debit card. Both of those programs are easier to use and have fewer hurdles for accessing your money.

SmartyPig is OK, but it’s no longer right for me.

What are your thoughts? Are you still using SmartyPig, or have their recent changes inspired you to look elsewhere?


Published or updated July 18, 2011.
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{ 2 comments… read them below or add one }

1 20 and Engaged

I’ve considered closing my SmartyPig account as well, just haven’t gotten around to it. Also thinking about an ING Direct account for my primary savings.

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2 Ryan

I’ve had an ING Direct account for years now – it’s a great account with many solid features. I also recommend looking into Ally Bank and Discover Bank for their features and interest rates.

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