SmartyPig is a new concept in virtual banking - one that encourages people to save for goals, not sign up for accounts. Part of a new wave websites making frugality chic, SmartyPig combines savings accounts with personal goals. The site is easy to use, easy to set up, and has social networking features that can make saving, well…fun. Since our first take at About.com banking in 2008, the site has picked up steam, gaining national media attention in recent months.
Here's the lowdown on how to get started & an in-depth review of what SmartyPig's website has to offer.
The Concept
SmartyPig describes itself as the "anti-credit card". The site focuses on frugality, astutely noting that in today's economic environment, less is officially the new more.
Saving for big purchases can be a drag - especially for people trying to wean themselves off of credit cards. That new flat screen TV or expensive gadget requires a bit more planning without a high-interest swipe of plastic, as it turns out. And that's where SmartyPig comes in. Insured by the FDIC, and with savings accounts earning up to a 2.15% APY, the planning tools and focus on savings make SmartyPig a great online resource. Best of all, the entire process is free.
Setting Up Goals to Bring Home the Bacon
SmartyPig allows registered users to set up savings goals and transfer a set amount from existing checking accounts. The amounts and intervals are up to you, and the goals are created in a fun, graphical format that's easy to understand and follow. Being able to graphically see the progress made in saving has a huge psychological benefit, encouraging and rewarding saving.
Saving for a big screen TV? A wedding? Exotic vacation? SmartyPig helps set up a plan to meet the goals, and provides feedback on progress. The feedback is mostly in the form of graphical charts; virtual piggy banks, to be exact. Multiple goals are fine, and the site helps create a savings plan based on individual needs.
Setting up the bank transfers for SmartyPig can be time consuming, but the site's extras make up for it. There's a minimum deposit of $25 to set up an account, but the minimum recurring transfer thereafter is just $10. The low transfer requirements encourage savings, even if it's just a little bit of cash at a time to start out.
Integrated Tools
SmartyPig offers more than just a clever name with its savings plan model. The site also incorporates integration with social networking sites like Facebook. While this may not be something everyone would use, it's a great idea for a larger goal, like saving for a wedding. Posting the SmartyPig goal on Facebook shows others your progress, and allows people to make contributions towards your goal. With everyone and their grandmother joining Facebook these days, that's an easy method to politely solicit funds for your big day.
SmartyPig's platform also supports mobile banking, and can export data to your favorite money management software.
A word of caution- the Twitter function may be a great way to update friends on progress towards a big goal, but it's unlikely friends would be keen on receiving a notification each time a deposit is posted towards a goal.
Cashing Out
When it comes time to redeem the funds, SmartyPig offers electronic transfers or a redemption in the form of a pig-like pink MasterCard. The funds are held through BBVA Compass, SmartyPig's banking partner.
Setting up and cashing out of a SmartyPig account is free. Transferring funds to friends' accounts via your SmartyPig account is also free.
Drawbacks
When it comes time to redeem your funds, SmartyPig offers "rewards" from high profile retailers. This can be a good deal if your savings goals lie entirely on Amazon, but could prove to be a bit of a temptation for others. The additional funds for purchasing gift cards is nice, but most people aren't setting savings goals for a shopping spree. The retailer rewards no doubt generate revenue for the site, but it sends a bit of a contradictory message to the overall goal of saving rather than spending.