Smarty Pig - 1.75% APY liquid savings

http://www.smartypig.com/

<50k gets 1.75% APY
>50k gets 0.50% APY

FDIC insured.

Looks like they don't have any additional requirements as far as I can tell. I've never heard of them before. What do you guys think?

Bogleheads thread on it

My favorite comment:
Finally, integration between my bank account and Facebook.

SmartyPig has been discussed extensively before; I've been using them for many months now. It's a pretty decent savings account, though it's not quite as "liquid" due to its all-or-nothing withdrawal policy. Thankfully, you can work around that limitation by transferring your desired withdrawal amount to a separate "goal" and closing it.

kaneohe said: when you make a deposit here, do the funds go directly to your bank account or do they go thru the middleman, smartypig?

Smartypig acts as a middleman/funds broker; in June they moved all their assets from West Bank, to BBVA Compass.

First of all, we've known for some time that SmartyPig would outgrow West Bank and have spent the past six months looking for a new banking partner. How did we know that we needed a new banking partner when West Bank was doing a great job and was such a perfect banking partner? West Bank told us.

Let me try to explain what happened in lay-persons terms. When we began this venture with West Bank we (West Bank and SmartyPig) knew if we were successful, we would outgrow West Bank. From a risk management standpoint, it is not prudent for West Bank to have a significant portion of its deposit base from one source. When the SmartyPig related deposit base passed 10 percent of West Bank's deposits, we began discussing alternative banking alliances.

ThomasPaine said: kaneohe said: when you make a deposit here, do the funds go directly to your bank account or do they go thru the middleman, smartypig?

Smartypig acts as a middleman/funds broker; in June they moved all their assets from West Bank, to BBVA Compass.

thanks for the reply.........I think my question wasn't clear enough so I'll try to do better. There has been some discussion elsewhere about concerns that if the funds went thru a middleman that was not FDIC insured that the finds would be risk during that period. This is similar to concerns when AARP started their (now,ill-fated venture). In AARP's case, checks were always made out to the actual bank so at least in principle, funds never were in the hands of the middleman. Is this also true here?

F Smarty Pig

I've been using them for over a year. No problems. Funds are FDIC insured.

Is this a true savings account whereas there is a 6 withdrawal ACH max limit or is it more like a checking account in that regard? If you have no spending goals because you cashed out -- hence zero in the account, do they close your account or let you have zero for a certain period of time, and how long is that?

Smarty Pig does lock up all the money in your spending goal for 4 business days once you transfer anything to it, meaning all of the money in that goal is no longer liquid for that period of time. From their FAQ: http://www.smartypig.com/how-it-works/faq
"Goals cannot be closed until 4-business days after the most recent transaction into your goal has posted."

A way around this would be to have 4 spending goals per goal (Savings A, Savings B, mini savings c, mini savings d) instead of one huge spending goal so only a portion or half of your money is locked up at any given time. You would alternate 2 of the spending goals so one of those are always available to cash out if needed while the other is locked up, once the mini goal is reached you would then dump that into the larger of the two spending goals so again half of that spending goal is never locked up if you need to quickly cash out.

For example, if you have a spending goal of $30,000 then you would split that up into two -- $15,000 each so you can at least always access the money in the $15,000 goal if needed, and then with the other two smaller spending goals you would keep putting money in equally till each equals $1000 always alternating them so you can have access to the money if you need $300 of that $1000 goal quickly, and once you have the $2000 -- both goals are met -- you put one in the $15,000 goal and wait till that unlocks and then put the other $1000 in the other $15,000 goal. This way you would have access to all money up to $30,000 plus the money up to $1000 most of the time instead of it all being locked up.

I also read somewhere that you can now take out partial money from your spending goal without having to close out the entire goal; however their FAQ still states, "SmartyPig does not permit partial withdrawals although we offer the option of transferring money between goals in the same savings account. Simply click on the Transfer Money link in your goal, and you will be taken through the steps to transfer funds to another goal."

So if what I read was wrong (unless their FAQ needs updating), a way around this would be to create a "partial spending goal" and transfer what you need into that and then transfer that out. A problem with this; however is you will not be able to transfer that partial amount out for 4 business days since it's locked up when transferring to the "partial spending" goal. So again if you need money in a hurry, the best thing to do would be to create that "partial spending" goal way in advance by having 5 "partial spending" goals with $25 each in them so you can quickly take out $25 at a time, kind of like what you would do at an ATM, and then create a new "partial spending" goal once you close one out. Perhaps you should even have a larger "partial spending" goal in the event you need a lot of cash in a hurry by creating a 6th one that contains $200.

I dunno, this all seems like a lot of work to try to make this account into a savings account and Evantage/AmericaNet's MMA is also at 1.75% which has a combined limit of $70,000 ($35k limit for each account) then rates over that amount drop to 1% and none of that money is ever locked up, so I'm sticking with them for now with my savings needs, though I do like the option of being able to convert Smarty Pig money into gift cards while making some "boost" change in the process, so I am interested in this.

I use SmartyPig and I love it for its ability to bring out your money in gift cards with bonuses. For example, if you choose to bring your money out via Amazon.com certificates, you get an extra 3% on the balance. Since they require you to close a goal and redeem "all or nothing," I recommend setting up a lot of smaller goals so that you can redeem smaller amounts.

TheKa said:   So that is an additional 3% interest if you spend the money on an Amazon gift card? With proper planning this approaches the 5% reward checking accounts that you can't find anymore.

Yeah, I guess you could consider it to be 3% more! The nice thing is that they don't charge any fulfillment fees for the Amazon cards, like they do for many other retailers.

And the rate drop has been poorly communicated in my opinion. When it went from 2.15% > 2% and from 2% > 1.75% I got an email in advance to say the rate was reducing...this time there has been no email. BBVA Compass FTW!

I had asked earlier, can someone please tell me if they do a soft or hard pull ? I am thinking of opening an account with them because of somewhat higher rates.