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SmartyPig Savings Account Review

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SmartyPig

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.

  Tags: SmartyPig, savings account

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Comments
17 comments.
Comment #1 by Anonymous posted on
Anonymous
does smartypig make money on the float? is there a time when your money is not making inerest? is this different from othere banks when you transfer money from one banking institution to another?

4
Comment #2 by Anonymous posted on
Anonymous
What happens to the interest if you close a goal prematurely?

2
Comment #3 by Joseph Elwell (anonymous) posted on
Joseph Elwell
If you close your goal prematurely, the interest accrued so far is deposited immediately.

Joseph Elwell.

9
Comment #4 by Joseph Elwell (anonymous) posted on
Joseph Elwell
"Partial withdrawals are not allowed. You may redeem your funds at anytime, but you have to close the entire goal (FAQ #44)"

This is actually kind of moot. Since you can split goals out.

 

As an example. If you have a single goal, with say 50K in it and a target of 75K. You can create a new goal and transfer any amount you want into it. So if you only want to pull out 10K, just create a new goal with any target amount and transfer 10 into it. then close that goal.

Joseph Elwell.

8
Comment #5 by Anonymous posted on
Anonymous
check out thegoalsaver.com it is very similar to smartypig but they are claiming it is not a bank.  I would be able to tell you more but they are not allowing registration at this time.

4
Comment #6 by Rosedala posted on
Rosedala
Hi...as to the POD it IS a good idea...but don't all the other institutions have that clause?  I was told on the phone that the application provides for entering only individuals' names over the age of 18, not organizations.  It's strange isn't it?  I just started the application and am waiting for their verification so I didn't get to that part yet.  It sounds like a good thing here...and hope they don't lower the rate. before the goals..  :)

1
Comment #8 by Anonymous posted on
Anonymous
SmartyPig has a creative way of marketing their products using goal savings accounts.  What they are really doing is getting people to invest in a CD type product that can continually funded.  This is why they pay a higher rate of interest (restrictions!!).  Just like any CD you will be penalized for early termination.

1
Comment #9 by Rosedala posted on
Rosedala
Hi #8, happen to know what the restrictions may be???   I can see only one which is probably a sudden rate reduction, deep enough as to make some people close the account(s) and open else where...which can be a hassle... But I do hope it will last at least 2 years?   :o)

1
Comment #10 by Anonymous posted on
Anonymous
Hey Joseph Elwell,

          I tried what you've suggested, but Smarty Pig doesn't allow you to transfter money between goal. YOu have to transfer money from external source to your goal. So, you can't pull out your 10k in your example. If I am wrong, please correct me. Thanks!

 
"As an example. If you have a single goal, with say 50K in it and a target of 75K. You can create a new goal and transfer any amount you want into it. So if you only want to pull out 10K, just create a new goal with any target amount and transfer 10 into it. then close that goal."

1
Comment #12 by Rosedala posted on
Rosedala
TO: Anonymous #11:

Care to disclose to us which bonds, mutual funds AND cash keep you "enjoying life to the fullest...in the big apple"???  I don't have a 5-figure pension but still I'd like to get that wonderful "happiness ****tail" too...   :o)   Thanks. 

1
Comment #15 by Rosedala posted on
Rosedala
TO #13 and #14:

If you are suggesting some bonds or mutual funds, etc....I'm sorry I do not understand them, but thanks just the same.  Yes, that's a pot belly pig.     :-)         Rosedala

1
Comment #16 by Robert Prather (anonymous) posted on
Robert Prather
Sadly, they have changed their terms.  It now says the following in the "Truth In Savings Account Disclosure" - "Interest is compounded and credited quarterly. If you close your Savings Account, only interest accrued up to the date of account closure will be credited to your account."  I think that means less interest.  And is clearly a direct result of switching to BBVA Compass.

2