Wednesday, April 1, 2009

FNBO Direct Will Drop its Interest Rate to 1.9% APY, Considering SmartyPig with 3.25% APY?

Savers continue to be punished. Tomorrow, Thursday, April 2, 2009, FNBO Direct will lower the interest rate offered on its on-line savings account from 2.15% to 1.9% APY.

A little over a year ago, I introduced SmartyPig to Consumerism Commentary, a savings account with a higher rate. Their current rate yields 3.25%, 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?


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