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.
SmartyPig continues to respond to customers in real-time, and has added a "lower this" to reduce your monthly savings if friends and family members' contributions to your savings goal has enabled you to choose between meeting your goal sooner, or reducing your monthly contribution. It suggests the difference for you too, so you don't have to do the math.
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