Friday, February 20, 2009

SmartyPig - Real savings for the rest of us!

A presenter at the FINOVATE conference in April will be SmartyPig.com. We at PLR thought you might like to know about this Iowa-based firm before that, so here’s a little primer on the company.

First, SmartyPig is not a bank. It’s an “independent online transaction solution.” A fancy name for an automatic withdrawal system that works with your bank and an FDIC-insured Savings Bank. Their banking partner is the 115-year-old publicly traded West Bank (NASDAQ: WTBA).

Put simply, it’s an automatic savings solution. You can really “pay yourself first” and mean it. When you set up an account, it is for a specific savings goal, and a dollar value $2,000 for a flat screen TV or $8,000 for a honeymoon cruise for example. You’ll also have to say when you want to accomplish your savings goal. TV for Superbowl next year? SmartyPig will calculate how much to automatically withdraw from the account specified to make achieving your goal as painless as possible.

Additionally, SmartyPig has a major social media component. Once you log in you can share your savings goal with friends and family. This would be great for families saving for their new baby, or newlyweds saving for a house, or even your little one’s college savings accounts.

Grandma and Grandpa can easily make deposits to the Smarty Pig account via your Facebook page or blog.

SmartyPig offers high interest rates (right now at 3.25%) but with minimum balances of just $25. How so high? They say the overhead is low, and they so far they don’t need to run an advertising campaign, further suppressing costs.

Oh, and did I mention there’s more? Once you’ve met your savings goal, you cash out with a gift card, AHC deposit or check. But if you were saving up for a specific purchase, request your payment in the form gift card, and get a boost of up to 6% with one of their Best in Class Retailers. They have partnerships with Zales, Best Buy, Sandals Resort, Amazon.com and many other leading retailers. Talk about value!

Each SmartyPig customer can have as many savings goals as they want, and the SmartyPig service is free.

They don’t disclose how many accounts there are, but they do say that the average account goal is $8,500, four years in duration and that the most frequent goal is vacation savings.

SmartyPig launched in March of 2008 and is a privately held company. Just before Christmas of ‘08 they also launched in Australia and New Zeland with their partner Australia New Zealand Bank (ANZ).

In an email interview with Jon Gaskell, co-founder of SmartyPig, he told me that because of SmartyPig’s structure as a “transaction engine,” SmartyPig can be up and running in any country, any language and any currency in 60-90 days. Watch for growth from SmartyPig for sure. When I questioned about expanding to other savings accounts Gaskell responded “We want to continue trying to perfect the social side of saving all over the world.” Lookout world—SmartyPig is on the move! I can’t help but wonder if in pursuit of global savings domination if they’ll have to adjust their corporate image to enter some markets? I don’t see the SmartyPig brand being universally accepted in all cultures, but I’ll be watching their growth for sure. It should be very interesting.

I also pushed Gaskell on the issue of savings. How can you really “sell” savings in a country that culturally just isn’t used to it? Americans are charging literally Trillions of dollars every year on plastic. I questioned as to if this is Field of Dreams scenario where if they build it we will come, or if he foresees a savings trend. He notes that while American Savings rates have been in the negative for years, they are starting to swing into positive numbers. He notes that SmartyPig isn’t innovative other than bells and whistles. It’s simply implementing the age-old tradition of save first, buy later. Timeless and wise financial advice that transcends all cultures.

If you would like to know more about how my experience was in setting up my SmartyPig Account visit my blog at for my review from a customer's perspective.

Jessica Ward is a freelance writer based in Seattle and enjoys writing personal finance, corporate profiles and non-profit profiles. Disclosure: she also happens to be a very happy SmartyPig customer.

10 comments:

Tom said...

I can tell you are a huge fan. There must really be something behind this. I'll have to check it out.

Brandon said...

This is an excellent idea for saving money! It’s like a modern take on the old “Christmas Club” accounts that savings and loans used to offer. With this economy, it’s a smart move to tap into the savings trend.

JessicaW said...

True! Also, something that was mentioned to me in one of my recent interviews (With Pertuity Direct I think) was the question of if we really want to be keeping all of our money in one bank.

I could feel my blood pressure going up when he mentioned that--I had just opened my third bank account at the same bank I've used for 16 years. I never even thought about diversifying my accounts between several banks. Yikes!

Smartypig is a pretty seamless way of moving money from your "regular bank" to a "secret stash" that's also in a separate bank and for some of us, a separate state.

I was once stranded in an Earthquake with no ID and $5. My bank knew me, so bent rules and handwrote a withdrwal (all of my banking info was in a buidling that was condemned) and they let me get $150 to get me by.

Ever since then I've always kept a stash of a couple hundred bucks in small bills... but what if my bank was totally out of commission for several days? It's a regional bank. Could be problematic. I'm feeling better knowing I've got another account stashed elsewhere that is accessible enough, insured, etc.

(Side note: my area is affected by earthquake, extreme windstorms, ice, snow, lahar, volcanic eruptions and tsunami, so I should be paying much better attention to my emergency fund than I have in the past...even with my previous earthquake experience!) Note to self... start emergency fund in SmartyPig ASAP!

Kim said...

Although saving money hasn't been a priority for many Americans, I can say the number one cause of that is that it is so hard. When there are so many things you would like to have, getting your money and then having to set it aside requires a serious amount of will power. I think this could be a great opportunity for people. The money automatically taken out so you never miss it, its wonderful. The high intrest rate is certainly appealing and being able to connect with others is great. This could especially be useful for people saving a home. Coming up with the down payment can be excruciating. I think we might even look into this. Thanks!

Anonymous said...

Woww, it's exelent idea. Greetings from europe!!

JessicaW said...

Thanks for sending us comments all the way from Europe. We sure wish we could take credit for the SP concept, but alas, it was those clever folks at SmartyPig. We're just glad to have found them! We hope you'll come back and read more soon!

JessicaW said...

For other Mint.com users, I noticed today that I could see my Smartypig accounts in Mint. I'm very happy about this latest discovery!

Tom said...

I don't see SmartyPig on the FINOVATE list anymore. SmartHippo is there but no pig.

Anonymous said...

This appears to be a novel idea for saving. Actually, saving with a difference!! Thanks for the info.!!

JessicaW said...

I just met one of my savings goals with Smartypig and I'm one month shy of meeting another. I wouldn't have saved for either item without the SmartyPig Plan. Working on more savings goals now! This is a GREAT program and their interest rates really are good.