First of all, you choose savings goals for your SmartyPig savings accounts. I love this, because most of us fail when we “just save” — we do a lot better if we attach particular goals to our savings. Also, if you make your goal public, friends and family can add money to your savings goal. I love this as an idea for birthday/graduation/whatever presents. I mean, I have enough stuff, but my savings goals are really important to me.
The real kicker is that they’re offering a higher interest rate on savings than most online banks right now. 3.05% APY blows all of my other accounts out of the water — they’re all hovering around 1.50%. But still, I didn’t want yet another online savings account. Most people say I have too many already — I have savings accounts at ING Direct, Emigrant Direct, E*TRADE, Citibank, and I just cancelled a low-yield one at Bank of America. Did I really want to add another one on top of that?
Well, yes, I finally did open a SmartyPig account as well. Mostly because I won a $50 SmartyPig gift card from the SmartyPig blog. I decided to use it as an opportunity to set up some new savings goals and move some money to the higher-yielding SmartyPig. I changed my Citibank account from a “new car fund” to a “charity fund,” where I’ll save up to give to my favorite charities throughout the year. Then I went to SmartyPig to reopen my “new car fund” there.
For your benefit, I documented the process of opening an account with SmartyPig below. It’s a little more complicated than some other online banks, but once you have an account open, it seems fairly simple to start multiple savings goals (just like the simple process of opening sub-accounts at ING Direct).
It is a bank account, so be prepared to give up the following information to open an account:
- Full name
- Date of birth
- Social Security Number
- Address, and previous address if you’ve moved within 2 years
- Driver’s License (or State ID) Number
- Five security questions and answers to identify you
And after that, you’ll have to answer four identity verification questions about yourself — which are probably pulled from your credit report based on the information you gave above. (According to the people at SmartyPig, this is a soft credit pull, not a hard one.) Once you’ve answered these questions, there are a few more terms of service to read and agree to, and then your profile will be created!
Now, to create a savings account in SmartyPig. Like ING Direct, SmartyPig allows you to have several savings accounts (or sub-accounts) within your profile. This is really handy for people like me, who have multiple savings goals. In my case, I’ll just set up the one for my Future Car Fund for now. But if I like SmartyPig a lot, it could become the place for all of my new savings goals as I come up with them.
To create a savings account, all you need to do is link it up to a funding source: an existing checking or savings account of yours. Once you’ve done that, you can create your first savings goal! You must set your savings goal, which can be changed later. I want to buy a car, probably about 5-10 years from now, depending on how my current car holds up and what happens in the rest of my life. For now, I’ll set the goal as low and far away, since I don’t have much money to contribute to this goal yet. Later, when I’ve got more money to contribute each month, I’ll adjust it. Honestly, I wish they made it a little easier to just say “$10 per month” instead of having to fiddle with the target amount and date.
A new savings goal requires an immediate deposit of at least $25. This was something I didn’t exactly care for, but thankfully doesn’t throw much of a kink into my plan. But now it’s something you can be aware of going into it, that I wasn’t aware of myself. So just to reiterate: for a new savings goal, you’ll need to be prepared to make an initial $25 deposit, and commit to automatic deposits of at least $10 per month thereafter (until your goal is complete).
So after you set up your initial deposit, figure your monthly contribution, and (of course) agree to some more terms of service, your new SmartyPig savings goal will be set up. Now, you might want to move more money into the goal. Maybe you’re like me, and you already had some money for this goal sitting in another savings account. Or maybe you’re like me in that someone gave you a SmartyPig gift card. Both are fairly straightforward and easy to find in your profile.
SmartyPig is a bit more stilted and rules-y than other savings accounts, but that might actually appeal to a lot of people. Some of us just need a lot of rules and automatic transfers to actually set and meet goals. Also, the higher-than-most-online-banks interest rate that they’re offering at the time of writing this (3.05% APY) is primarily what attracted me. (That and winning the $50 gift card, of course.)
If you like, you can open your savings goal up to friends and family to contribute to. If you do this, you can add a cool little widget to your website or Facebook profile, inviting people to do so. Like this:
Of course, you are all welcome to help me out with my future new car. 😉 I’m thinking a hybrid or an electric… or whatever awesome technology they have by the time I’m ready to trade in the Oldsmobile. What do you think?