- Review of: SmartyPig
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Saving for different financial goals is much easier when you have separate bank accounts to track your progress. But usually that means opening up multiple savings accounts at your current bank, and having to manage a lot of transactions and fund transfers.
To make this process seamless and simple, SmartyPig’s service allows you to create dedicated goals and still use one checking account for everything. Plus it’s completely free!
What is SmartyPig?
Think of SmartyPig like an online piggy bank that caters to organizing your money so you can save for a wide variety of financial goals. Their motto is “Simple. Smart. Saving.” It’s basically in the same family as the other microsavings products we’ve reviewed here, and the service is completely free to use.
Let’s say you want to create a goal to save for a new car, a down payment on your first home, or even for smaller goals like a vacation or new computer. You simply create a new goal inside SmartyPig and then set up automatic bank transfers from your existing checking account to fund it.
How Does SmartyPig Work?
Founders, Michael Ferrari and Jon Gaskell, created SmartyPig so anyone can easily create a savings habits and reach small financial milestones, while at the same time allowing friends and family members to offer their funds and support.
Open a Free SmartyPig Account. To open a free SmartyPig account, head over to their website and click the “Create Account” button in the top right hand corner of the screen. You must be at least 18 years old and have an existing checking or savings account to link to once your account is set up. You must also be a U.S. Citizens or permanent resident with a green card.
To finish the account set up process you’ll need your driver’s license or state issued ID handy, as well as your Social Security number, home address, email address, date of birth, and a mobile phone number. The entire sign up process only takes a few minutes, and requires you to verify things like your email address and phone number.
Choose a New Goal. Once your account is set up, your dashboard will display an area where your current goals will be displayed. Simply click the “Add a New Goal” button to set up your first goal. You can name the goal based on what you’re saving for, then choose the category it best fits, and how much you want to save.
Fund Your Account. Next you’ll set up an initial deposit amount, which has to be at least $25 or more. Next you’ll select the date when you’d like to reach this savings goal, and the bank account from which you want to set up automatic transfers from.
Set Up Recurring Deposits. You can set up recurring deposits on a monthly basis, every two weeks, or do one-time transfers whenever it’s most convenient. SmartyPig will recommend a regular savings deposit amount based on how much you need to save, and the date you want to reach your goal. Or you can simply type in a manual savings amount.
Once you’ve confirmed this new goal, the initial deposit from your bank to your SmartyPig account will happen immediately. You can also have friends and family contribute to your savings goal for special events like birthdays or graduations. Future transfers will take two business days to clear from your bank to the SmartyPig goal account. SmartyPig’s banking partner is U.S. based BBVA Compass, the 15th largest commercial bank in the country.
|Mobile App||Yes — Apple iOS and Google Android|
|Web Site Access||Yes|
One thing that sets it apart from some of the other microsavings services is that you can broadcast your progress on social media accounts and even accept contributions from friends and family members who are tracking your progress via Facebook or Twitter.
When you’re ready to cash in on the money you’ve saved up, you have three options: 1) Retail gift card and get a cash bonus of up to 14 percent, 2) a SmartyPig Mastercard debit card, or 3) Bank transfer deposit.
The money is stored in SmartyPig’s FDIC insured partner, BBVA Compass, just like a regular savings account at any other bank. It pays a small interest rate on the money you have saved and how much interest you earn depends on how much you’ll be saving with SmartyPig:
- Balances of $0.00-$50,000.00 will earn 0.748% (0.75% APY)
- Balances above $50,000.00 will earn 0.748% (0.75% APY)
Since SmartyPig is free for you to use as a consumer, how do they make money? According to CEO, Bob Weinschenk, SmartyPig makes money through their redemption program. Customers get an extra cashback boost if they choose retail gift cards as a way to spend their funds, then the company gets a marketing fee commission for the transaction.
This makes it more advantageous for them if you spend your money on their retail gift cards section or their Mastercard debit card, versus a regular withdrawal to your checking account.
You can access your SmartyPig account on the go via their mobile app, which is available for iPhone and Android users. View the current status of your goals, transaction history, and transfer additional money to any of your goals or your friends’ goals via the app.
You can post updates to Facebook and Twitter right from the mobile app, too. For quick and secure access, the SmartyPig mobile app comes with a 4-digit security code, and like the SmartyPig service, the mobile app is completely free to download.
- Opening an Account is Completely Free - Using SmartyPig's service is completely free. It's free to open an account and use their service, and mobile app, for separate savings goals.
- Interest-bearing Accounts - The money you save in SmartyPig will earn you a small bit of interest. Even if you've reached your savings goal, the funds will earn interest until you withdraw or spend the money.
- Separate Goal Accounts for Easy Savings - You can create unlimited goals with SmartyPig and set up multiple recurring deposits each month. Once you've reached a specific goal, you can continue using it, or start a new one.
- Outside Contributions Costs a Fee - If your friends and family contribute to your SmartyPig savings goal it will cost you a 2.9% convenience fee, so you won't receive all of the funds. The contributor deposit minimum is $10 and the maximum is $250.
- SmartyPig is Not a Bank - SmartyPig is set up as an online savings goal solution so they have to work with a banking partner to house your funds and make transfers on their behalf. Presently, your funds in SmartyPig are FDIC insured up to $250,000.
- A Separate Bank Account is Needed - Since SmartyPig itself is not a bank you will need to already have a checking or savings account in order to use their service.
- Spending vs. Saving is Encouraged - Although SmartyPig states that their goal is to help you save more money, when it comes to cashing out those savings and making purchases, they would rather you spend your money using retail gift cards. You can also fund savings goals with a cash advance from your credit card, which means you're spending a lot more money in fees, and on consumer items, than towards your original goal.
In addition to short-term savings goals, SmartyPig is a good place to park your emergency fund, but it’s not the best vehicle for larger long-term goals. They do not offer any retirement or investing accounts as they are strictly for saving.
The social sharing aspect of the platform helps you stay on track with your short-term goals and the recurring deposits help you create a smart savings habit. You’ll also earn a small amount of interest on your money, while being able to use the service free of charge.
Overall, SmartyPig is a smart and simple microsavings product. As long as you have an existing checking or savings account, you can start using SmartyPig, at no cost, today.