SmartyPig: An Online Piggy Bank or an Online Savings Account?
BySmartyPig is a Des Moines, IA based company that offers online savings accounts that allow borrowers to save up for specific goals. Many in the financial blogosphere (including us) have compared SmartyPig to other online savings account offerings such as ING Direct and FNBO Direct, but maybe that’s not the most apt comparison. SmartyPig is probably better characterized as an online piggy-bank than a traditional online savings account.
Think back to your youth. When you wanted to purchase something, it’s possible that your parents made you save up and pay for it. Often this would come in the form of putting money into a piggy bank until you had enough to make your purchase. When the time came you would smash the piggy bank and take out your savings to make your purchase.
SmartyPig operates very much like an online piggy-bank, but instead of putting money into a ceramic pig, you’re putting it into an FDIC insured online savings account that’s offering a much better rate of return than any piggybank (and almost any other online savings account) would offer.
You put in money slowly, month by month, until you reach your savings goal. Typically SmartyPig users use the service to save up for major purchases such as new cars, vacations, and high-end consumer electronics. Once you have enough money in your SmartyPig savings account to meet your goal, you smash your virtual piggy-bank and then get your money back out in the form of an electronic transfer back to your bank or in the form of a gift card.
SmartyPig really is the 21st century version of a piggy-bank, but it’s much better than any piggy-bank you might have put money into during your youth. You actually earn interest on the money you have in your piggy-bank and you have the opportunity to redeem the funds in the form of gift cards to major retails and you get a bonus for doing so. If you redeem your funds for a Macy’s gift card, you currently get a 12% bonus on your money.
SmartyPig also provides its customers with a number of tracking tools and calculators to help determine how and when they can meet their savings goals.
If you’re looking for a savings account to put money in and take money out as needed, SmartyPig probably isn’t the best fit for you, but if you need a modern version of a piggybank to save up for something, SmartyPig is an excellent choice.