Saving for a Goal with SmartyPig

Jacob Allred

If you haven’t used SmartyPig before and are comfortable with online savings accounts (like ING Direct), I highly recommend checking it out.

SmartyPig is an online savings account that currently pays 2.01% APY. That rate isn’t much different from most of the other online (well, nearly double ING Direct’s at the moment), but how the account works is drastically different.

To demonstrate how it works, lets say I want to save $2000 by November 1st to help with holiday expenses like airfare and Christmas gifts. Instead of just dumping money into a savings account every now and then and hoping I reach the goal, I can use SmartyPig. I tell SmartyPig how much I have saved already (let’s say $500), how much I want to save ($2000), when I need it by (November 1st), and how often I want to deposit more money to the account (let’s say once a month on the 1st). I can then click a button and SmartyPig informs me that at the current APY, I need to deposit $185.27 per month to reach my goal. If I want I can adjust that amount up or down, although if I adjust it down then I probably won’t reach my goal in time.

Once the goal is setup, SmartyPig automatically transfers my scheduled deposit out of my checking or savings account at another bank and deposits it into my goal account. I can easily see how close I am to my goal in both dollar amount and percentage. If I want, I can even put a widget on Facebook or my website showing how close I am to my goal.

I can also tell SmartyPig that I want to accept contributions for my goal. This makes it easy for mom or dad to chip in a few bucks to help me fly home for the holidays.

So those features are neat, but not really earth-shatteringly amazing. So what makes SmartyPig so awesome? You can withdraw money from your goal at any time, but if you wait until you reach the goal then you can utilize the SmartyPig cash boost!

Let’s go back to the holiday expenses example. It is November 1st and we have $2000 in our SmartyPig savings account. Time to cash out. We already started doing some Christmas shopping, so we can transfer $1000 to our checking account to help pay for that stuff. We need a hotel, so we can request a $250 Travelocity gift card and they’ll send us a $275 gift card. We need to buy some tools for dad, so we request a $250 Home Depot gift card and they’ll send us a $257.50 gift card. Some clothes from Macy’s would be nice, so we request $200 from them and get $224. The wife wants some jewelery so we request a $300 Jared gift card and get a $321 gift card.

If you’ve been keeping track, our account only had $2000 in it but we got $2077.50 in cash and gift cards. That is because SmartyPig gives your money a boost when you cash out your reward in the form of gift cards. You can find a list of their “best-in-class” retailers here. Sure, the average 2% to 6% doesn’t sound like much, but in this example we get $77.50 for free just for shopping at places we were already planning on shopping at! And if you don’t want to spend your money at one of their retailers, you can withdraw your money to a prepaid debit card or to your bank account.

How can they afford that? Volume. SmartyPig purchases gift cards in bulk at a discount from the retailer. The size of the discount varies based on the retailer. If they get a 10% discount then they might give you an 8% boost and pocket the 2% difference. The retailer is happy because you are forced to spend that money at their store, SmartyPig is happy because they just made 2% of the gift card face value, and you are happy because you just got 8% more than you ordered. Everyone wins. Note: Percentages are for example only, I have no idea what the actual amounts are…

Check it out at!