I’ve mentioned that if you are not getting the most out of your bank, you are certainly better off looking for an alternative. With the invention of online banking, the standard of service for banks has been bumped up even higher.
Here’s a bank that is doing some of the bumping: SmartyPig
SmartyPig is a very different bank. Aside from having a creative name and a great looking and easy to use website, SmartyPig has a very unique way of operating. They are an online bank, but instead of just having a bank account, or even sub-accounts like ING, SmartyPig offers a much smarter way to save: with Goals. They don’t even have an option for having a simple generic account to stash money in, everything done within SmartyPig is with a mission.
Why I think goals as a requirement is a great idea
I’m sure you have heard the studies about requiring employees to opt-out of 401k’s instead of having them opt-in. With 401k enrollment as an opt-out, a huge increase in 401k participants occurred versus when it was an opt-in policy. Personally, I think this is probably half due to fear that the wrong investment choice would be made, and the other half because many people don’t understand how to get a 401k set up or how it works and are afraid of looking uneducated to their colleagues if they ask questions.
Nevertheless, what SmartyPig is doing when they require goals to be set up is they are creating a system that makes us much more likely to save. You are more likely to reach goals of any kind when you pen them out, create a plan and set them up on autopilot. Not only do you have a concrete plan of what you are trying to accomplish, you can see your progress which is a proven motivator. Although you are required to set up goals in your account, you are free to withdraw money from your goals at any time. Keep in mind that some of the other benefits of using SmartyPig will be out of reach if you withdraw your money before completing your goals.
Other benefits of SmartyPig
The interest rate at SmartyPig is currently 1.75% APY which beats over 90% of banks available right now, and even beats most CDs. There are no fees when using SmartyPig and the only financial requirement is that you deposit a minimum of $25 dollars into new goals you set up. After that, you can set the goals to automatically draft monthly contributions from your checking account, or contribute to goals manually whenever you like.
On top of a great interest rate, SmartyPig offers retailer bonuses when you achieve your goals. What this means is that if you complete a goal you have set, you can withdraw that money you have saved in a number of methods but one of which is in retailer gift cards or credit. This may seem counter-intuitive as you would be tied to a specific retailer, but SmartyPig actually offers a bonus when you withdraw your savings in this way, some of which are up to a %14 bonus on top of what you have saved. If you are savings for some purchase that is available from retailers like Amazon.com or Best Buy, getting a significant cash bonus for withdrawing on their retail credit system is great.
SmartyPig is social. I don’t mean that it attends your dinner parties or will get you in with the ladies; what I mean is that you can share your goals with your friends and family via Twitter, Facebook or email and ask for help with your goals. I wouldn’t suggest making goals like buying the complete season of Sex and the City open knowledge, but if you are saving for college, I’m sure sharing that goal and asking for contributions from friends and family is quite appropriate.
My thoughts about this new pink player in the banking game
I’ve been a member of SmartyPig for about a year and have to say their goal system really works. I use ING direct in the same way, setting up sub-accounts for specific goals and setting up automatic contributions to those accounts on a weekly basis, but SmartyPig was actually designed for that and is easier to manage your goals in.
Their website is really easy to use and I love that, plus the social features are really cool. I think it’s a great idea to get friends and family involved when saving for specific goals and you could even use this kind of thing when saving together for a family reunion. Even if friends and family don’t contribute, it’s interesting to see what others are saving for and watch their progress.
I think it’s a great bank especially if you have trouble reaching your financial goals.
The SmartyPig Race Out of Debt Contest
I misread the announcement for this contest and thought it ended next month so I dropped the ball on getting the word out, but you still have until 10AM CST on September 27th to enter so here is the scoop:
SmartyPig is giving away close to $5,000 dollars to help one lucky winner get out of debt. To enter the contest, you just have to open an account with SmartyPig and set up a goal for your credit card debt, with a few specific bits of info that will tie that account to the contest.
On the 27th, eight finalist will be drawn and their ID numbers will be assigned to live pigs that will race to determine the winner. Yea, pigs!
I entered last week and am anxiously awaiting the pig race, even if I am not chosen as a finalist. It should be pretty cool to watch! Talk about a modern bank, no longer will you associate banking with stuffy old men in expensive suits after tomorrow. br>