A friend of mine recently asked if I had heard of SmartyPig, a website dedicated to helping individuals save for personal or financial goals. I hadn’t, so I decided to do some research.
My first impression of the site was positive. A bit cutesy, but very user-friendly. It works like this: You sign up (for free) and set up an account of sorts for your goal (or, multiple accounts for multiple goals). Your goal could be anything from a vacation to debt repayment. You then add money into your account whenever you like. You can set up a monthly deposit, or add money you received as a gift or from a windfall (hello, tax refund). You can also make your savings goal public, sharing with your family and friends, who can then make donations toward your savings goal.
This is where I found the kicker. When other people donate to your account using a credit card (or, I would assume, the credit function of their debit card), there is a 2.9% fee. So, the site will take $2.90 of every $100 deposited, via credit card, by people other than yourself. There is no fee for deposits made from other SmartyPig accounts.
While I understand that the fee might be necessary, I found myself a bit irritated that one of the few fees attached to this service is for something that is one of their greatest selling points; namely, that your family and friends can donate money toward your goal.
The other hang-up I have with the service is that when you have saved for your goal and would like to remove your money from your account, it’s issued as a SmartyPig debit card. On the one hand, I assume this feature affords the site a great deal of ad revenue, as there is a list of “Best-In-Class Retailers” who offer small discounts when you shop with them using the SmartyPig debit card. However, I would much prefer a deposit into my personal checking account. Or at least have that option available.
To wrap up, I think the concept is somewhat cool, and I can see how it might work for many people, especially those with children as the site is so intuitive. But, personally, I will stick with my ING account for my savings goals.
- Allows you to save for “specific” goals. This means you can essentially name your account using your goal.
- It’s social. The website is also a social network, so if you prefer Last.FM to, say, Pandora Radio, you might like the socializing aspect of the site.
- It’s easy to use.
- You are charged a 2.9% fee for every credit card donation made by someone other than yourself. I would also assume that you will be charged the fee as well if you use a credit card, although I am guessing most customers link through their personal checking accounts.
- When you have reached your savings goal, your money is provided on a SmartyPig debit card. It is not simply deposited into your personal checking account.
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