As I mentioned in this previous post, SmartyPig is now partnered with BBVA Compass. Your money at SmartyPig is held in a separate account in your name at BBVA Compass, an FDIC insured bank. I thought it would be useful for another review of the SmartyPig savings account since it has been a while since my last review and since SmartyPig continues to offer the best rate for a nationwide savings account for balances under $50K. As of 8/03/2010, the rate is 2.15% APY for balances up to $50K. Balances above $50K earn 0.50% APY (on the entire balance). I would guess that this rate will likely hold for a while since it wouldn't look good to have a rate cut around the time of the transition to BBVA Compass. Since I first reported on SmartyPig in April 2008, they have always been one of the rate leaders.
SmartyPig isn't a typical savings account. It's built around the savings goal concept in which you set up the amount of a goal that you want to reach at some point in the future. You then make an initial deposit and set up recurring deposits to meet that goal.
SmartyPig is also a different savings account in its social media aspects. You can share your SmartyPig goals with friends and family members on popular social networking sites or on your blog.
When you reach your goal or when you decide to end your goal, you can have the funds and the accrued interest transferred (via ACH) back to your external account. You can also have the funds placed in a retail gift card from a retailer partnering with SmartyPig. The nice thing about the gift card is you can receive a cash boost on your savings. Most of the boost percentages are 5% or less. Some current examples include 4% from Amazon, 4% from Sears, 3% from Best Buy and 1% from Walmart. According to the NYT Bucks Blog, these retail gift cards are the main way SmartyPig makes money.
For those who just want to use SmartyPig like a regular savings account, you should be able set up goals and recurring deposits in a way that won't be too much of a hassle. One thing to note is that you can't do a partial withdrawal of the funds inside a goal. You must close the entire goal. So if you think you may need to make partial withdrawals, you should set up multiple goals.
I noticed a few things that have changed for the better at SmartyPig. According to the FAQs, ACH transfers back to your checking account only take 2 business days. They used to specify up to 7 business days. Another nice change is that account holders can now specify a POD beneficiary. Below are some of the important features of SmartyPig based on SmartyPig's FAQs, Terms and Conditions and Truth in Savings.
- Opening, funding and redeeming a goal with SmartyPig is free (FAQ #6)
- Minimum initial deposit to start a goal is $25 (FAQ #8)
- Each Savings Goal may have a recurring contribution. The minimum is $10.00 (Terms and Conditions)
- Once you have met your savings goal your automatic monthly contribution will stop. Your funds will continue to earn interest until you manually close your goal. (FAQ #27)
- You can add money to your savings goal at any time (FAQ #43)
- Goals may be closed at any time without penalty (FAQ #20)
- Account Holders may have multiple Saving Goals (Terms and Conditions)
- Partial withdrawals are not allowed. You may redeem your funds at anytime, but you have to close the entire goal (FAQ #44)
- When a goal ends, you will have the option of receiving your current savings plus interest on the SmartyPig MasterCard Debit Card, the gift card of a retailer partnering with SmartyPig, or you can ACH the funds back to your existing checking or savings account. Each redemption option is free (FAQ #20)
- ACH transfers back to your external account take 2 business days for the funds to post to your bank account. (FAQ #30)
- ACH transactions take 3 business banking days to clear. SmartyPig defines funds as having cleared once SmartyPig has collected the funds and has full use of the funds (FAQ #18)
- Users can establish multiple funding sources for a Smarty Pig Account (Terms and Conditions)
- The Account Holder may designate a Payable on Death (POD) Beneficiary on his/her SmartyPig Account and Savings Account. (Terms and Conditions)
- Interest is compounded daily and is credited quarterly. If you close your Savings Account, only interest accrued up to the date of account closure will be credited to your account (Truth in Savings)
We should see some new features at SmartyPig this year. When SmartyPig announced the alliance with BBVA Compass, they gave us some hints of what to expect:
No, we're not content to sit back and let SmartyPig stay as is: we've got lots of new ideas, features, and functions that we'll be rolling out this year - stay tuned.
In a depressing interest rate environment, it's nice to see a service like SmartyPig that adds some excitement to saving.