Remember the good ol' days when online saving accounts like ING and SmartyPig used to have really high interest rates? Well, those days are long past, what with SmartyPig's rate lowering to 1.1 percent starting June 15 (its third drop in just nine months) and ING's rate coming in at a measly one percent.
SmartyPig's CEO says the reduction in rate is a result of a change in its business model, which focuses less on the high interest rate and more on rewarding "customers who want to save for smaller goals and then buy something through one of the company's retailer partners, for which they receive cash back (in addition to the interest earned in a savings account)."
I guess everyone's wondering what the appeal of these online saving accounts are now. I mean, the reason why these online banks don't have brick and mortar stores is to lower their overhead, thus providing customers a better-than-normal interest rate. Now, the interest rates the firms are offering customers just seem very average. I'm curious to know what you are doing stashing your savings while online saving accounts keep lowering their interest rates — where are you putting your cash?