SmartyPig: A New Take on Online Savings Accounts
The web has brought forth a lot of financial companies with twists on traditional investments and account-types. Prosper and Lending Club have created a new investment class that allows individuals to loan each other money, PayPal has made transferring money online very simple, and now Smarty Pig is rethinking how a savings account should work.
SmartyPig is very similar to many of the online savings accounts that you see online, such as ING Direct, FNBO Direct and Dollar Savings Direct, but SmartyPig adds a pinch of psychology to their account. Instead of having a general savings account for your money, you set a specific goal that you are saving to, such as a down payment for a house or for a new big-screen television.
When creating your goal, you will be asked what date you want to complete the goal by, what the total dollar amount is for the purchase and some general information about the item that you want to purchase. You then get a special account for that goal and can put money into it manually or with an automatic savings plan. Smarty Pig will also recommend how much you should save every month so that you can meet the goal by the date you specify. You can also send invites for friends and family members to make deposits into your account to help you meet your goal.
Once your account balance reaches the dollar amount of the goal that you set, you can either transfer that money back to your checking account or SmartyPig can send you gift cards to the retailer that you would use to make the purchase at. When you go for the Gift Card option, you can often get a 5% or 10% bonus on your money, so if you had a $100 goal that you met, you might actually get $105 worth of gift cards depending on what retailer you are going to buy the item from.
The terms and conditions you will find your SmartyPig online savings account will be very similar to what you would find in other online savings accounts. They are currently offering 2.01% APY on your savings, which is very competitive in today’s market. For comparison, ING Direct is currently offering 1.40% APY and FNBO Direct is offering 1.50% APY on their online savings account offerings. SmartyPig’s depositors money is deposited with West Bank, which is an FDIC member.
SmartyPig puts a very interesting twist on the idea of an online savings account. It’s a great tool to help you establish and meet goals, but if you’re looking for a standard savings account and aren’t saving for a specific goal, you should probably stick to one of SmartyPig’s competitors. If you have a specific goal or purchase you want to make and want encouragement to help get there, SmartyPig is an excellent choice.
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