I already wrote in the past something about savings. It’s about time to add some more:-).
So this time I want to mention one specific on-line savings bank:
SmartyPig caught my eye not just because of the very high interest rate (2.15% APY, currently, which is the highest I know of), but also because of the concept: saving not just in a general account, but per goal you set yourself.
This is nice, because it combines two different things: a piggy bank, and a conventional on-line savings account.
The piggy bank part is the most interesting: you can set yourself goals of certain amount of money accumulated by a certain time (for example, for vacation, buying a new car, or any other major spending), and the website will calculate how much you should deposit every period, to accumulate the planned amount by the pre-set date. You can also set up a direct transfer to do the savings automatically, and just watch your savings reach the goal. This solves the major problem of the goal-dedicated savings: persistence. Almost everyone noticed at one point of time or another that while trying to save for something, the savings went away to something else, or you just stopped saving. With this system and the automatic transfers – you don’t need to do anything to continue savings, you won’t forget or miss, and you will reach your goal on the planned date.
One interesting thing to mention is that you can “publish” your goals, and have others donating to your goals, which is neat. This can be useful for fundraising, for example, or just several friends planning goals together and saving jointly (without the hassle of opening a joint account).
Once you reached the goal, they allow redeeming using gift cards (so that you can give the lump sum or parts of it as a present to someone, for example), or directly to your bank account.
The savings account part is as simple as everywhere else, except for the competitive APY. However, as with any other online savings accounts, this APY will get lower and lower after the initial period of market penetration, and eventually will be similar to the competitors, so you should take advantage of it now, while it’s high.
All the goals accumulate interest at the same rate, and the interest is per account, which is FDIC insured. Do remember to read the fine print and the account rules when you open the account.
Enjoy your savings!
Your Little Advisor