Friday, June 22, 2012

SmartyPig - Piggy bank your savings to reach goals!

Lately I have been researching about the best checking and savings accounts out there. My current aim to setup an emergency fund at the earliest. As I build this fund, I want to keep it in an account that will offer me a good interest rate and a good liquidity policy.

Everyone must maintain an emergency fund. We all run into emergencies once in a while. These events wreck havoc with our planned budgets. An emergency can be anything - a near and dear one may fall sick or your car may suddenly need repair. We should always have an emergency fund which will allow us to respond to these situations without having to break any investments or borrow money in anyway.

I have been thinking of keeping this money I am putting aside in a high interest yielding account. My current checking account with one of America's biggest banks pays me no interest whatsoever. Well, that's no good place to save money in! At the same time, I cant put this money in a high yielding CD and lock it away for a year or two. I need to be able to utilize this money when i face an emergency.

One of the options I came across was SmartyPig. SmartyPig is an online website partnering with BBVA Compass bank that provides online savings accounts to people like us. The most unique feature I found about this online bank was its emphasis on social networks and how to utilize them to save!

SmartyPig allows you to open a savings account and specify a goal for it. For ex: You are telling them that I am opening this account with a goal to setup an Emergency fund of 7500$. Opening an account can be done entirely online. They will prompt you for your information (All the same information that you would give when you open an account at the branch) along with information of your Goal and the target amount.
You will have to link your current account from which you want to transfer money into this savings account. Once the link is created, you can transfer some money when you wish or setup automatic payments into your SmartyPig account.

Now lets see how this online savings account sets itself apart from other online banking accounts -
1, SmartyPig is currently offering 1% APY on its accounts. This is definitely one of the best interest rates out there in today's environment!
2. You can specify a goal  and target for your account. Then publish this information via Twitter or Facebook to your friends! They can participate in helping you save for your goal as well as encourage you on these social sites!
This is pretty unique. It will definitely encourage a lot of youngsters to save. One of the tricks of achieving any tough task is to announce that you are taking on the challenge. The additional pressure and motivation received from this publicity will help you move towards your goal!
3. There is no fees and no minimum balance! They promise that there is no catch. That is really very helpful since I need liquidity on my account.
4. Once you achieve your goal, you can transfer the money back to your original source of funding if you wish. 
Now here is the twist! They offer a couple of more ways to take the money you saved.
Redeem your goal by taking it back as gift cards from retailers like Amazon, Lowes etc. These retailers offer up to 11% in cashback savings. So in case you were saving for a goal like buy the latest Plasma TV, you benefit on the extra savings via the Amazon gift card as well!
You can also redeem your goal via a SmartyPig Cash rewards card. This is accepted via the Mastercard network. It acts like a prepaid card and Smartypig offers 1% cashback on every purchase made using it as well. So your money is buying you more than it can once again.
Caution: Both of these options to redeem are aimed such that you end up spending that savings via a retailer or prepaid card. So be careful while availing these options. Be sure that you actually saved to spend on something you need!
5. The account is FDIC insured for 250000 $. So you can be assured of its safety.

All these unique features make this a very attractive savings account. If any of you have used this bank, please do feel free to comment and let me know how good or bad this is!

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