If you have a family member graduating from high school or college in the next month, you might want to consider a SmartyPig gift card. This can be a good option for those who used to give paper savings bonds as gifts.
This year the Treasury ended allowing paper savings bonds to be sold at banks and credit unions. Paper savings bonds were nice gifts. As described in this Savings Bond Advisor post, the paper savings bond "is something practical, and it teaches people how to save money. It's a great teaching prop: an oversized piece of paper that doesn't look like anything else."
Like a savings bond, a SmartyPig gift card can provide more than just money. It can teach people how to save money. Here's how SmartyPig describes its gift cards:
SmartyPig gift cards are available in $25, $50, and $100 denominations. They can be given to both current SmartyPig account holders and individuals to whom you would like to Give the Gift of Savings™ so they, too, can create SmartyPig accounts, become responsible savers and reach their savings goals. SmartyPig gift cards can only be used to start a SmartyPig goal or fund an existing one.
For many of us who are dedicated savers, SmartyPig's goal setting requirements may not be seen as an important feature. However, for many people (especially young adults) who struggle with credit card debt, SmartyPig's focus on savings and goal-setting should be beneficial.
The big December rate cut may have soured SmartyPig for many of us. However, for those who don't have much savings, this doesn't have as much impact. The goal-setting features and the cash back savings on retailer gift cards are more relevant. Once you have reached a savings goal, you can receive cash back savings by placing it on a retailer gift card. Two current examples of cash back percentages include 3% at Amazon and 2% at Best Buy.
You can purchase the SmartyPig gift card with a credit card, but note, there's a 2.9% processing fee. If you're a SmartyPig customer, you can fund the gift via an ACH transfer from your bank. That will avoid the fee.
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. Please refer to my SmartyPig savings account review for more details about how SmartyPig works.
Update 5/25/2012: You can still give savings bonds as gifts, but they can only be digital savings bonds. I have more details in this post.