Earn 4.50% at Provident Direct & 4.30% at SmartyPig

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I just saw a post on FatWallet that talks about the Provident Direct online high yield savings account that’s currently paying 4.50% (edit: now only 3.75%)! It seems like a good deal especially given today’s market conditions. However, the Fed is expected to drop rates again tomorrow so who knows how long this rate is going to stay competitive. Currently, it’s the highest that I know of. It’s also FDIC insured at Provident Bank which has been around since 1886. The online portion has been around since November 2007.

It says that there are no minimum balance requirements and no monthly fees. You only need a dollar to open. The major downside is that withdrawals are limited to $5000 per transaction but you can do multiple transactions per day. However, savings accounts are government regulated and cannot exceed more than 6 transfers out in a month. Any withdrawals after that will be charged a $5 fee. You can bypass the $5000 limit by “pulling” from another account rather than “pushing” from the Provident account. Apparently there’s also a $25 fee for closing the account within 180 days and a$5 monthly fee if the balance dips below $300.

I’ll have a full review when I open an account in a little bit. I’m going to wait and see what happens to the rate first. It would be a great place to park my emergency fund which is currently only earning 3.85% at FNBO Direct.

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In other news, there’s a new concept in the online savings space that I stumbled onto today. It’s called SmartyPig and it basically combines an online savings account with social networking. The basic premise is that you need to set goals that are funded by monthly deposits into SmartyPig. The goal is active until it is reached. The social aspect comes in when you make your goal public. People can help fund your goal by using a credit or debit card (with a $4.95 processing fee). Once goals are met, you can “withdraw” the money via MasterCard debit card or a gift card from participating retailers. At this time, there is no way to receive that money via ACH transfer in cash. This is apparently done so that it’s harder to use the money since the purpose is to save it.

Deposits are FDIC insured and held at West Bank, which has $1.3 billion in assets. Deposits also earn a very competitive 4.30%, albeit with some limitations. I think it’s a good idea, but I definitely wouldn’t use it to hold my emergency fund because it’s not liquid enough. However, I don’t think it was intended for that purpose either. I think there’s a market for this and if it helps people to set savings goals and encourages them through the social aspect, it could be a winner. I’m holding off on it for now, but maybe I’ll revisit it later. Maybe I can set up a public goal to get out of debt and you guys can contribute!

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5 thoughts on “Earn 4.50% at Provident Direct & 4.30% at SmartyPig”

  1. Hello and thanks for the post! Just wanted to let your readers know that within the next few weeks we will be updating our public contribution and gift card fees. SmartyPig customers will be able to make contributions to other SmartyPig users’ goals and buy gift cards at NO cost if they use their existing SmartyPig funding source, i.e. their checking or savings account. Our fee to make a contribution or buy a gift card using a credit card will be set at a flat 2.9%, and we are also planning on releasing a few other payment options in the future, as well, so that using SmartyPig will be economical for all users. Again, much appreciation. -Jon Gaskell, Co-Founder

  2. Hi,
    I like the way you write ..Its really different and interesting … keep the momentum going ..I hope tis will really going to help me in future..brilliant. . The trouble with being educated is that it takes a long time; it uses up the better part of your life and when you are finished what you know is that you would have benefited more by going into banking.

  3. What is this Debit/Credit card thing your SmartyPig money is supposed to go onto when you reach your savings goal? Total crap!

    When I want my money from SmartyPig I TRANFER it out BACK to the bank I transferred the money into Smarty Pig from. No fee. Simple.

    And, my goal can be changed any time so IT IS NOT LOCKED. Christ, if I set a goal of $100,000 over 10 years and needed my money. I would just CHANGE the amount of my goal to $1 or so over what it is now your SmartyPig balance and VIOLA- YOU REACHED YOUR GOAL. Now just press that Smartypig button and for NO FEE transfer that money right on over to another bank.

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