Once upon a few months back, I wrote about all the things we’ll need when we return to the US at some as-yet-determined point in the future. At that time, I said that I was going to start saving money each month for these anticipated, large expenses. As often happens, life has been a little busy and I hadn’t acted upon those plans until today, when I opened a SmartyPig account.
SmartyPig is an unusual twist on a savings account. Similar to a Christmas Club type account, you set up your SmartyPig account to automatically transfer a set amount of money regularly, to be cashed in at some designated future time. There are several ways that SmartyPig is different, though.
First, it pays a pretty decent rate of interest, currently 1.75%. For comparison purposes, a similar account at Navy Federal Credit Union is currently paying just .75%.
Second, you can make long-term goals. I set my goal to be met by April 2013. With that long a term, I only have to contribute a small amount each pay period to meet my goal.
Third, you can choose to redeem your SmartyPig account by getting gift cards for certain retailers, and many retailers offer a “bonus” between 1% and 14% for choosing to redeem your SmartyPig account for their gift card. For example, Sears(a favorite here in the Kashman household) offers a 4% bonus if you redeem your SmartyPig account for a Sears gift card.
There are a few negatives to a SmartyPig account. First, your goal must be at least $250.00. Second, you must link your SmartyPig account to a bank account. That makes some people nervous. On the up-side, you can edit your goal at any time, which gives you all sorts of flexibility in terms of how much money is debited from your account each time.
I’m trying to think if there is anything that I have neglected to mention about SmartyPig. This is my first foray into SmartyPig territory and I’ll let you know if anything interesting happens along the way.