Link to SmartyPig:https://www.smartypig.com/
In spite of the cutesie name, SmartyPig is a bona fide on-line bank. Deposits are held at BBVA Compass and are FDIC insured. The concept behind SmartyPig is that you set a savings goal and make regular contributions until your goal is met. You can share your goal with others (only if you choose to) and can even invite others to contribute to your goal. This is an interesting concept and could be very useful in many cases (saving for a wedding, a down payment on a home, a new car, a vacation, or a child's college education for example). This is all spelled out in detail on the SmartyPig web site, if you want to know more.
Personally I'm not interested in making regular contributions towards a goal in a SmartyPig account or sharing my goals with anyone else. What I'm going to write about is how SmartyPig can be beneficial even if you DON'T want to do any of the above. I'll also tell you about the little "hitch" I ran in to so you can avoid and deal with it, and will even share a little "secret bonus."
I opened my account with SmartyPig about 1-1/2 months ago, for 2 reasons:
1. Their current APY on savings accounts is 1.00% which is decent given the current low-interest-rate environment.
2. With your savings, you can get gift cards that give you a cash boost of up to 11%. You can see a list of participating retailers here: https://www.smartypig.com/how-it-works/retailer-offers/reta... I shop regularly at Amazon.com (just 2 days ago a box arrived for me from Amazon - vacuum cleaner bags - pretty exciting huh?), and occasionally at Macy's and Dillard's. So I knew I would use this feature. The boosts for those 3 retailers are: 11% at Macy's / 5% at Dillard's / 3% at Amazon.com.**
Here is an overview of the process:
- Register with Smarty Pig
- Set up your savings goals: Assign goal names, amounts, and target dates. Regarding the target date, if you just want to deposit your money once and start earning your 1% interest like I did, set a target date of at least a week out the first time. That will give you time to get everything verified and funds transferred. I allowed 10 days to be safe but it was probably longer than I actually needed. (Once you are up and running, you can set target dates of just a couple business days in the future, just enough time for funds to be transferred.) SUGGESTION: Create many smaller goals rather than one or two large goals (more on that later, it has to do with the hitch I ran in to).
- Link your SmartyPig account to an existing checking account. You will need to verify your account, in the way that is pretty standard for on-line banks. SmartyPig will make 2 small deposits in to your checking account (which they immediately withdraw - sorry creditcardfree, no mini snowflakes here) and you enter the amounts of the deposits on the SmartyPig web site. Once that is done, Smarty Pig can transfer funds from your checking account and you are up and running.
- When you want to withdraw funds, you close a savings goal.*
*AS PROMISED - THE HITCH (and suggestion to deal with it): When you close a savings goal, you really close it. You get 100% of the amount in that savings goal (your initial deposit plus interest earned) back, either in gift cards or a transfer back to your linked checking account. So don't think that you can create one savings goal and make incremental withdrawals; you can't. I learned this the hard way. I thought I'd put low-4-figures in to a "Shopping" savings goal and request gift cards from time to time over the course of several years. WRONG! I had to take it all at once. Fortunately, I didn't have to take it all in gift cards. I just ordered what I wanted in gift cards, and the balance was transferred to my checking account. Having learned my lesson, I then set up a couple different "Shopping" goals each with low-3-figures. Unless you know exactly when you will want to withdraw your savings and how much, I recommend that you break your savings down into multiple smaller goals. I now have 7 goals, 2 for "Shopping" (earmarked for future gift card orders) and 5 more general ones. You can name your goals whatever you like and no one is going to follow up to make sure that is how you really use them. I chose names that were relevant to why I save (EF, Retirement, DH's Dream, Travel, and Car) but for all anyone cares you could call them One, Two, Three, etc. This may sound complicated, but it's really not. Yes, you will have to take a couple extra minutes setting up the goals, but it's really not that hard. And you'll be glad you did when it comes time to make a withdrawal.
**Also as promised, the Secret Bonus for all you SA numbers geeks: The cash boost is actually higher than what it states on the web site. They shave the boost off the top of the face value. For example, I got $150 in gift cards from Macy's. 11% ($16.50) was shaved off the top so I paid $133.50 for the gift cards. That means I actually got a 12.36% cash boost ($133.50 x 1.1236 = $150).
Overview - My Opinion: So far, so good. I'm satisfied with the security & navigation of the site, fund transfers have happened quickly & smoothly, and I have ordered gift cards from both Amazon (electronic card) and Macy's (physical card) and have used both without any problems. I'm happy with the 1% I'm earning because it's the highest of any of my savings accounts. And the cash boost on gift cards is great.
Hope this is useful information. If you have any questions, let me know.