If you’re looking at jump starting your savings goal or need help staying focused on it, you may want to look at SmartyPig. I’ve heard a lot about the account, so I decided to review its features.
Setting Up an Account with SmartyPig
It’s FDIC insured, you have a competitive interest rate (2.15% right now), and there are no fees to maintain the account. SmartyPig is not a bank, its accounts are held at BBVA Compass. Like with your brick and mortar bank, you need to fill out the financial paperwork to open an account with SmartyPig.
You set up your funding ($25 minimum) and you can elect to have an automatic transfer into your savings.
What’s Your Savings Goal?
Besides getting your financial information, SmartyPig has the additional step of having you create a specific savings goal for your account. If you watch the video that SmartyPig has up, you can see the different goals you can have for your account.
- Car Fund
- Home Improvement
The minimum amount for a savings goal is $250 and the maximum is $250,000. The idea is to move away from the instant gratification of irresponsible use of credit cards towards a cash based system. While it might be a bit of pain getting towards a goal, you can make a guilt free purchase.
Is it working? Are people taking advantage of this online savings system? SmartyPig released some statistics on their customers’ saving habits.
- The average SmartyPig customer’s saving goal is just shy of $5,000 with the average length of a goal being 24 months.
- Nearly 75% of all SmartyPig users are between the ages of 18-35. More than 85% are between the ages of 18-45. (Figure doesn’t include accounts for minors)
It’s a step in the right direction, having people motivated to save.
Allowing family and friends to add to your savings account through social sites, such as Facebook and Twitter, is a unique feature. It’s a great way for friends and family to see what your financial goals are and it gives them the ability to contribute to them.
It’s also a way for your to have some accountability for your finances. Positive peer pressure can help you meet your goal. Do have this option, when you set up your account, make sure you choose “accept contributions”.
What happens when you reach your goal? You have a few options:
- ACH transfer to your checking account – You can send you money to your checking account to use.
- SmartyPig Debit Card – You have a debit card from SmartyPig that you can have reload from future savings goals.
- Retail Gift Cards -You can earn a bonus on top of your savings, depending on the vendor.
Retailers that have partnered up with SmartyPig include:
- Amazon (4% bonus)
- American Airlines (3% bonus)
- Barnes & Noble (5% bonus)
- Best Buy (3% bonus)
- Jared (7% bonus)
- Macy’s (12%)
If you’re saving up for a TV, using a retail card can give you a slightly better deal. Weigh your options to get the best deal for you.
Thoughts on Using SmartyPig
SmartyPig seems a good option for people looking at saving for a specific goal. I think this could be a great place to park you money for a car replacement fund or your next vacation. I wouldn’t use this for an emergency fund even though the interest rate is better than most places.
I’d love to hear your thoughts. Have you opened an account with SmartyPig? What do you think of the service?