Uncategorized: SmartyPig Review 2010: A Review of SmartyPig’s Online Savings Account

SmartyPig provides an innovative new way to save for and reach financial goals. Here’s our SmartyPig Review:

Saving for major purchases involves as much psychology as it does actually saving. Most of us would like to save up for a major purchase such as a new car, a new laptop or a new flat screen television, but we often lack the discipline to make it happen. Instead, we either don’t make the purchase or put it on credit, pushing us further into debt. Fortunately, now there’s an online savings account that encourages you to be disciplined in saving for major purchases and provides you a great interest rate for doing so–SmartyPig.

Traditional savings accounts only provide you a place to park your savings. SmartyPig provides you an online savings account, but it also encourages you to save for major purchases. You can use the service to target specific savings goals, then the service will help you develop a savings plan to help you meet your goals. SmartyPig users can create savings goals starting at just $250.00. The maximum goal size is currently $250,000.

Once you meet your savings goal, you can transfer the money to your checking account or receive the balance in the form of gift cards to a number of retailers including Amazon.com, American Airlines, Barnes and Nobel, Bed Bath and Beyond, Best Buy, Cabela’s, GameStop, GAP, Home Depot, iTunes, Jared, Kmart, Kohls, Macy’s, Overstock.com, Sandals, Sears, Staples, Toys’R’Us and Travelocity.

The benefit in opting for the gift card option is that you can receive between a 2% and 12% bonus on your money. If you had a savings goal of $100 and received your payment in the form of a Macy’s gift-card, you would actually get $112 for the $100 that you saved.

The service also lets you invite your friends and family members to contribute to your goals as gifts. You can provide a link to friends and family members that they can use to transfer money into your account as a contribution into your account.

From a savings account perspective, SmartyPig currently offers a 2.01% APY rate of return on your money (as of January 1^st, 2010). Comparatively, ING Direct is offering a 1.30% APY interest rate on their Orange Savings Account and FNBO Direct is offering a 1.40% APY interest rate on their online savings account. SmartyPig savings accounts have no monthly fees or other account fees. Your actual savings will be placed in WestBank, which has partnered with SmartyPig to provide the account aspect of SmartyPig’s services.

Here’s how to get started saving toward your savings goals with SmartyPig:

(1)    Create an Account. Simply enter in some basic information and provide a means to transfer funds into SmartyPig. SmartyPig’s database is safe and secure, which is verified by McAffee and TRUSTe—two leaders in computer security and online privacy. Create your account on SmartyPig.com

(2)    Create Your Goals. Once you have your account setup, you can create your savings goals. Tell SmartyPig what you want, whether it’s a new car or a dream vacation. SmartyPig provides an interactive calculator that will help you to figure out how much you need to put away to reach your goals.

(3)    Start Saving. Once your goal is in place and have a savings plan setup, it’s time to start saving. SmartyPig provides options to make additional one-time payments and allows family members to contribute to your goal as well.

(4)    Reach Your Goals. Once you’ve reached your goal, you have three options to redeem your funds, including an electronic transfer back to your bank account, a SmartyPig MasterCard Debit Card or receive up to a 12% boost to your savings when redeeming with a gift card.