Wednesday, May 6, 2009

Opened a SmartyPig Account

This is a follow-up to my post yesterday -- I opened a SmartyPig account. SmartyPig itself is not a bank per se, but it partnered with the FDIC-insured WestBank, to form a "nationwide savings initiative".

Opening the SmartyPig account was straight forward and easy. The identity verification process went without a hitch. I was able to open an account and link my funding source (i.e., my bricks-and-mortar savings account) in less than 20 minutes.

Although I can set-up my SmartyPig account like any other online savings account, I decided to give the "savings goal" feature a whirl. I selected the day of the month I wanted to deposit money and the funding source. I could've added an additional funding source, but I stuck with my bricks-and-mortar savings account.

I was then informed that $25.00 would be immediately withdrawn from my funding source that would not count towards this month's savings goal.

I then set up a savings goal (e.g, $1,000) and the time frame I want to achieve the goal (e.g. June 2012). SmartyPig automatically calculated the monthly contribution amount of $25.

This was an arbitrary goal I input. I can always edit or stop my savings goal and I can also transfer my funds back to my funding source via ACH transfers with no penalty.

I decided not to make my SmartyPig account "public". A SmartyPig public savings goal is one where a customer chooses to let his or her friends and family members see his or her savings goals, and allow them to make contributions if they so choose. Although this is a very creative and clever feature, I would feel awkward asking my friends and family, "Please donate to my vacation fund!" But if anyone figures out a way to ask for money without being perceived as a moocher, please do let me know. I'll make my account public then.

I think the SmartyPig account will work out well for me. I currently have my bricks-and-mortar savings account linked to my checking account. In order to avoid the monthly service charge, I have $25 from my checking acount automatically transferred to my savings account. My bricks-and-mortar savings account is currently yielding only 0.1% in interest, but by transferring $25/month into SmartyPig, I'll now get 3.05% APY.

The only problem I see with this arrangement is that I've now opened my 7th savings account. *egads!* One of these days I will simplify my banking. One of these days...


Money Beagle said...

I just heard of SmartyPig as well. My wife saw it in a baby magazine where they recommend opening one for family and friends to contribute to a college fund or whatever. Not sure but it got me thinking about it.

Curious about one thing, I thought you had a system where you had some of your savings broken down into earmarks. Why wouldn't you just create an earmark in an existing savings account instead of opening yet another account to have to manage? Seven is a lot of accounts to keep track of!

Miss M said...

7 savings accounts, yeah that is probably a few more than you need. I have 3, one brick and mortar and 2 online. Perhaps the purpose of advertising your goal to friends and families is to get money "donated" for your birthday or christmas, in lieu of another gift. It's not quite the same as asking for a handout and allows them to help you with your goal.

Shtinkykat said...

Uhhhh... Yeah. I should write a post about how I ended up collecting 7 savings and 3 checking accounts over the years. I always worried that I would become a crazy cat lady. That fear hasn't come to pass (yet), but I'm becoming the crazy savings account lady. LOL.

444 said...

I've heard of Shmarty Pig but have never known anyone using it. It's cute; the 3% interest sure is better than the .1% (sometimes I wonder why they even bother when it's that figure or less. I actually had a bank manager snicker when revealing the interest rate, because I asked. Very unprofessional but honest.)

We've been closing down unused accounts. Feels like spring cleaning.

Kimmie M. said...

like Miss M. said, public ones are for those asking for contributions instead of other gifts (graduation, birthdays, etc). they added a new goal "type": house downpayment. i think it would be great to ask for contributions instead of registering for gifts if you're getting married.

Sharon Rose said...

Hi there-this sounds a real motivating account though, I love how it can work if you so want it to (the public part of it as well). Good for you and good luck on saving for the vacation!

Ms. MoneyChat said...

7 accounts shtinky ... good golly wolly. LOL. i'm waaay too lazy for to maintain that many. smartypig seems like a neat idea, i'm digging the concept.

so, any thoughts on where you want to go w/the funds?

Lucy Grey said...

I opened a SmartyPig account a few months ago. Besides it taking a few days to process deposits I absolutely love it. It's definitely a smart choice.