Smarty Pig Savings Review
SmartyPig Interest Rate
What is SmartyPig?
SmartyPig.com is a social savings account that combines goal-based savings accounts and web 2.0 social tools. In addition to attracting customers with its unique model, it also pays one of the
highest interest rates on the web - 0.75% APY. It’s difficult to innovate in an area as old as the savings account, but with a slick user interface and strong interest rates, SmartyPig is an excellent place for savers to keep their cash.
The essence of SmartyPig is around savings goals and automatic withdrawals from another account that are automatically transferred to SmartyPig. Goals might be saving for a new car, a vacation, birthday gifts or anything else a person might save money for. Goals can be started with as little as $25 and can be funded with a periodic (e.g. monthly) withdrawal or manually as you have money available. Human nature for most people suggests that automatic withdrawals are the way to go, but SmartyPig has plenty of options either way. SmartyPig itself isn’t a bank, rather it’s an interface on FDIC insured deposits at BBVA Compass bank. The interaction all happens through SmartyPig and the practical extent of BBVA Compass’s involvement is their name appears on tax forms.
Savings Goals With SmartyPig.com
Goal-based savings accounts aren’t a new invention. Bricks & mortar banks have had Christmas savings clubs and other devices for a long time and ING Direct certainly beat SmartyPig to the concept on the web by several years. SmartyPig does a better job with its user interface its competitors in the goal savings arena, but what really differentiates it are the social tools that allow savers to take contributions from others toward their goals or simply report on their progress for encouragement and support. With easy to share widgets that utilize popular social networks, SmartyPig makes it easy to customize privacy and depth of sharing to a user’s preference.
SmartyPig.com Social Media
With the launch during the Great Recession, the social aspects of SmartyPig rely somewhat on the premise of saving for items before buying them is in vogue. Users can customize things such as a percentage to goal or amount is shown on a widget, giving them some control over privacy. The social aspects allow users to collect donations from others to contribute toward their savings goals. For example, a young couple saving money for a baby’s crib might get donations from parents or friends toward their goal in lieu of baby shower gifts. Alternatively, a friend of mine uses it to collect dues for his club soccer team.
Personal Experience With SmartyPig.com
Having been a SmartyPig customer for over 4 years, I’ve had goals come and go as they’ve been fulfilled and new goals have emerged. I also use SmartyPig to “escrow” for large, infrequent purposes. For example, I pay car insurance only once per year because I receive a discount to do so. I have an automatic withdrawal set for 1/12 of the amount for each month so that when the bill comes due, I can simply transfer the money back to a checking account to make a payment.
- Relatively high interest rates compared to other banks
- Easy setup, good service
- Unique social tools for sharing and collecting money
- Some well known online banks offer better interest rates: Capital One and
- Must close goals in order to transfer money out
- Stand alone savings account – lacks direct integration with other bank services
One downside to SmartyPig’s goal-based savings model is that it’s not possible to transfer some money from a goal back to another account. It is easy to circumvent that lack of functionality by transferring money between savings goals, then closing a goal with the amount you want to withdraw. However, it sometimes seems like unnecessary gamesmanship is needed to manage my own money. Along that same vein, SmartyPig also attempts to add value through partnerships with retailers that would add a few percentage points on to the account balance in exchange for taking withdrawals in gift cards. However, it also makes the withdrawal process more complex and sometimes feels a bit salesy.
SmartyPig Review Summary
As a whole, SmartyPig is a good option for goal-based saving, keeping an emergency fund and other saving needs. While some customers may find it cumbersome
to have another bank, SmartyPig’s easy integration, interesting social tools and strong interest rates make it a good choice for most savers. There are, however,
better interest available from the well-known, big online banks (online bank promotions for 2016).
reviewed by Brokerage-Review.com on