In a previous post about 4 Stash Your Cash Deals Most People Haven’t Heard Of, I mentioned the new FDIC-insured savings site SmartyPig.com since they have consistently high yields, currently at 2.15% APY on balances up to $50,000 with no minimums or monthly fees. Funds are held at BBVA Compass Bank.
I also mentioned that even though they do have a some restrictions due to their “piggy bank” image, they have added enough flexibility (in response to user feedback, which should be applauded) that you can use it virtually like any other savings account. I got a few questions on what I actually meant by that statement, so here are a few “hacks” that I have used to increase the flexibility of my savings. I prefer to think of it as getting around their gentle nudges to keep saving. 🙂
Ground Rules
When transferring money into SmartyPig, you must do it in the form of Savings Goals. Your goal can be anywhere between $250 and $250,000, and you must transfer in at least $25 from a linked bank account to get it started. You can also schedule a recurring deposit of at least $10 a month towards the goal, but you don’t have to.
- You can make as many goals as you like.
- You can make additional one time, non-recurring contributions to a goal.
- You can end a goal at any time without penalty, but you will have to redeem the entire existing balance all at once. There are no partial redemptions.
- You can change your goal amount at any time.
- You can transfer funds in between goals instantly. There is a limit of five outgoing transfers per calendar month per goal. Accrued interest cannot be transferred and will remain in the goal where it was earned.
Emergency Fund / Partial Redemptions
Setting up SmartyPig as an emergency fund is straightforward. I set a big goal like $25,000, and then put in a regular contribution. But what if something comes up and I want to make a withdrawal of say $1,000 out of the $5,000 I’ve already set aside? According to the site, I must end the entire goal and cash it out completely. Not so fast. In this case, I would:
- Start a new goal, call it Emergency Fund 2.0.
- Transfer $4,000 from my original goal into the new 2.0 goal.
- Now, I should be left with $1,000 in my original goal, and I can cash it out by clicking on “Stop Goal”. I’ll also be cashing out all the remaining accrued interest.
- I am left with a new goal with $4,000 still earning 2.15% APY, and $1,000 is headed to my main checking account to pay for the unexpected expense.
“Boosted” Gift Cards to Multiple Retailers
Another perk of SmartyPig is the ability to redeem your cash goal for a retailer gift card with a “boost”. You can get a 1% bonus at Wal-mart, 3% at Lowes, 4% at Amazon.com (my fave), and 12% at Macy’s. So for a $250 goal, I could cash out for $260 at Amazon. By default, you can only redeem a goal for one retailer. But by using the method above, you can effectively split your goal balances into smaller chunks.
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Regarding the partial withdrawal and stopping goals, remember that to set up a new goal, it will take 2-3 business days to transfer the initial $25 into that new goal. What I would do is make these Emergency Fund 2.0/3.0/4.0 all in the beginning so if the emergency happens, you can close out a goal isntantly instead of waiting 2-3 days to start a new goal, then another 2-3 to close it out and send to your bank.
Thanks for the tip. I haven’t needed to yet, but I was wondering how I would withdraw partial amounts
How do they offer double the typical CD interest rate as compared to BBVA Compass Bank?
Thanks,
Michelle
I use SmartyPig much in the same way that you described and it works for me. The gift card boost is nice, and while 2.15% is not that exciting, it beats many of the emergency fund alternatives. I don’t think that is correct that you can only redeem a goal for one retailer. I recently stopped a goal and redeemed it for gift cards from multiple retailers with no problems.
Can you share your Smart Pig account with more than one person?
I don’t think that you have to do recurring transfer of minimum 10. I have set up goals without recurring transfer.
I finally setup an account after reading from you about it a few times. Is it possible to “push” money in from another account? I don’t seem to have an account number nor do they make their routing number very easy to find.
Hmm…
15. What is my account number?
Your SmartyPig account number is 38 alpha numeric characters and is encrypted for security reasons. For support and tracking purposes, we refer to accounts by account and goal name. You can only transfer funds into your SmartyPig account via ACH by logging into your account.
Thanks for the Info. I found it very helpful and it may come in handy in the near future.
@Mike – Good tip. Especially since I was wrong initially and you don’t need to set up recurring transfers if you don’t want to.
@Michelle – My guess is that they make money off of the gift certificates and debit cards options, and probably barely break even on the interest paid out since it is so high.
@Maria – Thanks for sharing, I will have to try that next time. I got that from reading from the FAQ.
@Jenna – Other people can contribute to your goal, if that’s what you mean.
@KP – You are correct. You no longer need a recurring transfer at all. Sweet.
@Frankie – No, they don’t let you initiate transfer from other banks, I forgot to cover that. They seem to have blocked it pretty tightly.
@Tracy – You’re welcome!
@Jonathan – Yes, that is what I meant. Thanks for letting me know!
Smarty Pig is also great for starting a teen on a savings goals, be it his or her first used car or a sweet Summer trip.
Why? It’s high tech, easy and safe. Perfect for teens.
Even though the account is with an insured bank, I still don’t feel like Smarty Pig is risk free. Something doesn’t feel right with this, and I will be staying away…
It’s the name, nellcat… what a joke. Who came up with Smarty Pig?
I agree with the other commenter–could be a great starter tool for a teen to display the benefits of saving
I don’t think SmartyPig is worth the hassle. Get a Money Market at Evantage or AmericaNetBank and you can get 2% on up to 35k, no strings attached.
Thanks for the tip! I am not too happy with my current online savings account for my emergency fund (interest rates keep going down, account minimum required) and wanted to switch everything over to my Smarty Pig account where I have goals for travel expenses & car repairs. However, until I read this article, I didn’t think it would work since I don’t really have a set “goal” for my emergency fund. I now plan on closing my old savings account and taking your advice on setting up my emergency fund with Smarty Pig. Thanks!
I’ve read that once you reach your goal, you can only get the money back in a debit card form or a gift cards. I read the following online from a review of smarty pig “At no point in time can the funds in your SmartyPig Savings Account be transferred to a third party or a bank account outside of SmartyPig. Funds can only be redeemed on a SmartyPig MasterCard® Debit Card, a Best-In-Class Retail Gift Card or cashiers check.” Is this correct? I don’t want to put $12k on a debit card.
@Christine – That was true when SmartyPig first started out. But they listened to user feedback and they now allow you to transfer your goal back to an external bank account without any fees.
SmartyPig just may have joined the Web2.0 failure list after slashing rates from a competitive 1.1% to a non-starter 0.7%. I think this is worth an update as I learned about the site from your blog.
Any tips on good online banking savings rates?
oh.. here is the link:
http://blog.smartypig.com/read/announcing-a-change-in-apy/
Where is Piggysmart located? I feel uncomfortable giving my money to an instutition not knowing where it is physically located. Thank You!
If you have the SmartyPig CashBack Debit Card, you can withdraw funds once a month from each of your goals to it without closing the goals, without a charge, and INSTANTLY. I am an AVID SmartyPig fan, and I love the informal-sounding name.
Blaine ‘Capitals for Emphasis’ DeLancey
p.s. And now with the Debit Card, you get 1% Cash Back on ALL purchases.
Thanks for the tip! I didn’t realize they had this limitation to begin with, so I had set up a “sinking fund” for auto repairs. When I looked to transfer some money back (so as to meet my monthly budget) I was disappointed I would have to completely close the account. But with your post and some quick math, I’ve learned how to overcome this limitation and all is well.