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High Yield Savings Account with Some Twists at SmartyPig

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Update 5/28/09: The current rate is now 3.05% APY.
Update 5/06/08: The rate has fallen to 3.90% APY.

SmartyPig is a new type of high yield savings account that's intended to help people save for specific goals. It has two features that are designed to help with this and are different than what other savings accounts offer: social savings tools and the ability to redeem savings for gift cards that provide bonuses of 2 to 5%.

For those who plan to use this to save for specific purchases, SmartyPig can be a better option than other savings accounts. For those who are in the habit of going into credit card debt, SmartyPig makes even more sense especially if the social savings features can help you change your ways.

The savings account currently has a yield of 4.30% APY which is the best savings account rate for any bank. This has attracted the attention of many readers who have commented on this. At first I thought the limitations it has on accessing your money would be a major issue with many readers. From what I can see, you can use ACH to make your initial deposit and set up recurring ACH deposits for your savings goal. You can't use ACH to transfer out. Even with these ACH restrictions, I think it can be a good deal for some. Like any savings account, the yield is subject to change. But since it's so new, there's a chance that the rate will stay very competitive for some time.

Update 10/27/08: You are now allowed to make withdrawals with ACH transfers (see SmartyPig FAQ #20)

BestCashCow has a good review of this service. Below is a summary of its features based on SmartyPig's FAQs and the Terms and Conditions:

Social Savings:
  • Allows friends and family see your goal, the percentage saved toward that goal and how much money he or she saved. Goals can also be made private.
  • Allows friends and family to contribute to your goal. There's no cost for existing SmartyPig account holders who use their ACH funding source. For a friend or family member to add money to an account via a credit card there is a 2.9% charge.

Gift Cards:
  • Savings can be used to purchase gift cards from participating members, including Amazon, Best Buy, Circuit City, Lowes, etc. Often these gift cards provide a bonus of 2 to 5%.
  • Update 4/15/08: For current bonus percentages, refer to this spreadsheet from MyMoneyBlog.com.

Minimum and Maximum Deposits and Savings Goals:
  • Minimum deposit: $25 needed to start a savings goal.
  • Maximum deposit: $50,000 in a 24-hour period to any savings goal, including contributions made to other SmartyPig account holders' savings goals.
  • Minimum requirement for a savings goal is $250.
  • The maximum amount for a savings goal is $250,000.
  • Each savings goal must have a recurring monthly contribution. The minimum is $25, and the maximum is $50,000

Transfer Limitations:
  • The SmartyPig MasterCard Debit Card can be used at any ATM machine to withdraw your funds up to established daily limits
  • ACH the funds back to your existing checking or savings account

Fees:
  • There are no monthly fees, load fees or ATM fees charged by SmartyPig or West Bank.
  • Fees will only apply when a card needs to be replaced, or if certain banks charge a SmartyPig customer for using their ATM machines.
  • Insufficient funds fee is $25 per occurrence.

Update 4/15/08: There's no longer a $25 fee when you request a check for money withdrawals.

Update 4/11/08: A commenter provided the following details that he received from SmartyPig:
Credit pull: It's a soft pull through Equifax. If you have a security freeze on your file, you need to unfreeze it because, for security purposes, they will turn down applicants with a freeze.

Account Activity: You can just "register" for an account without starting any savings. After one year of account inactivity, the account will be closed.

The savings accounts are held at West Bank, an FDIC insured bank (Certificate # 15614). If you go to West Bank, you'll see a link to SmartyPig so you know without a doubt that SmartyPig is legit.

Thanks to the many readers who have mentioned this new service.

Edit 10/27/08: Updates based on new terms: ACH out now allowed, larger deposits allowed.
  Tags: West Bank, SmartyPig, savings account

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Comments
12 comments.
Comment #1 by Leonard (anonymous) posted on
Leonard
Actually, Alliant Credit Union's Savings Account is the highest, at 4.35%.

Of course, Alliant's rate might lower faster than SmartyPig's.

Thanks to Banking Guy for explaining in detail what SmartyPig is.

Interesting that West Bank's site doesn't have any savings account on their site that is paying an interest rate nearly as high as with the SmartyPig plan, so the bank must be getting extra money for all of the automatic ACH required deposits each month...plus they must be hoping people will use the Mastercard Debit Card. So, maybe it is similar in some way to Rewards Checking when it comes to the bank hoping to make enough profits to cover the 4.30% interest payments.

1
Comment #2 by Anonymous posted on
Anonymous
4.30%-2.90% = a small return for credit card users.

1
Comment #3 by Anonymous posted on
Anonymous
For 0% Purchase rate cards.

Havent seen any cashback cards greater than 2.9% lately so only 0% purchase cards seem to be good here.

1
Comment #4 by Anonymous posted on
Anonymous
Actually you can get 0% Purchases AND Cashback cards/rewards points on them.

1
Comment #5 by makeinu (anonymous) posted on
makeinu
I wonder what the limit on the debit card for teller assisted cash advances would be. For most debit cards it's the same as the purchase limit, but prepaid debit cards sometimes have restrictions.

1
Comment #6 by Anonymous posted on
Anonymous
Capital One Platinum:

1.25% Cashback + 0% Purchase rate. Perfect card for SmartyPIG.

15k maximum limit though.

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Comment #7 by Anonymous posted on
Anonymous
4.30-2.90%+1.25% @ 15000

Return will come out to virtually nil. Doesn't pay to do.

1
Comment #8 by Anonymous posted on
Anonymous
Does anyone know where you can find more info about the gift cards? Like which merchants are available, how much of a bonus each of them add, etc. I can't seem to find it on the website anywhere... perhaps you need to register before having access to this information?

Also is there a credit pull when opening an account?

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Comment #9 by Anonymous posted on
Anonymous
I would also like to know what type of credit check is done. Is it a hard or soft pull?

1
Comment #10 by Anonymous posted on
Anonymous
I sent an email to customer service asking about the credit pull, as well as some other account details. They emailed back very quickly (no more than 2 hours), and provided a very detailed and personal response (the email was from Jon Gaskell, the Co-Founder). Here's the info I got:

Credit pull: It's a soft pull through Equifax. If you have a security freeze on your file, you need to unfreeze it because, for security purposes, they will turn down applicants with a freeze.

Account Activity: You can just "register" for an account without starting any savings. After one year of account inactivity, the account will be closed.

Hopes this help! I was very impressed with the customer service.

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Comment #11 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for checking on this and commenting! Glad to read they don't do a hard pull. I updated the post with this info.

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Comment #12 by TacoShredder (anonymous) posted on
TacoShredder
Rate has fallen to 3.90%

1