SmartyPig has created a new twist on the idea of an online savings account. They’ve created a means for you to save towards specific savings goal, then once you’ve reached that goal you can redeem your funds in the form of a Visa Debit card or gift certificates to a number of online retailers at a discounted rate. For example, you might be able to get $100 worth of Amazon.com gift certificates for $95 of your savings.

The idea began when several entrepreneurs started seeking out savings plans that operated similarly to the 529 College Savings Plan. In theory, the small amount of money taken from each paycheck to save for the kids college education, eventually added up to quite a nice sum of cash. Using that same theory, Smartypig.com was created as a way to save money for vacations, special occasions, or even a nice big screen television.

Once registered on Smartypig, users can set up an account and establish goals for which they are saving. The account is free to set up and use. You provide information about the item or event you are saving for, how much it costs, how much you can afford to spend, and your target date to have all of the money. Smartypig will recommend how much money you should deposit and you conveniently set up an automatic deduction from your bank account. There is a minimum opening deposit of $25 required and a minimum savings goal of $250.  In addition to the money you deposit, Smartypig also enables you to allow your friends and family to help you meet your money goal. Each money transfer will cost a small fee. You can invite them or visitors can search for your account by entering your email address and easily contribute to your account.

The money collected in the Smartypig account will continue to add up and collect interest until your savings goal has met at which time you can opt to retrieve your money via a Smartypig MasterCard or by selecting a gift card from one of many participating retailers. The interest they’re offering is comparably very high in today’s market at 3.90%. The retailers may also offer bonus incentives towards the item for which you are saving.

Smartypig has a lot of the same terms as a bank account and is still carefully monitored to protect against national security concerns and other illegal money practices. When registering, you will need to be a US Citizen and over the age of 18 (unless you open an account with a parent). You will be asked to provide several forms of identification including your drivers license number, social security number, current and previous address information, email address, date of birth, and phone number.

If you are looking for a traditional online savings account, this probably isn’t it. If you are saving up for a specific goal or purchase, such as a new car, or a new flat-screen television, this is definitely the place to go. You’ll get a great rate of return on your money, additional encouragements to save, and bonuses for paying for your purchase with gift-cards.

This entry was posted on Sunday, August 17th, 2008 at 2:26 pm and is filed under reviews. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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