In a previous post about 4 Stash Your Cash Deals Most People Haven’t Heard Of, I mentioned the new FDIC-insured savings site SmartyPig.com since they have consistently high yields, currently at 2.15% APY on balances up to $50,000 with no minimums or monthly fees. Funds are held at BBVA Compass Bank.
I also mentioned that even though they do have a some restrictions due to their “piggy bank” image, they have added enough flexibility (in response to user feedback, which should be applauded) that you can use it virtually like any other savings account. I got a few questions on what I actually meant by that statement, so here are a few “hacks” that I have used to increase the flexibility of my savings. I prefer to think of it as getting around their gentle nudges to keep saving.
When transferring money into SmartyPig, you must do it in the form of Savings Goals. Your goal can be anywhere between $250 and $250,000, and you must transfer in at least $25 from a linked bank account to get it started. You can also schedule a recurring deposit of at least $10 a month towards the goal, but you don’t have to.
- You can make as many goals as you like.
- You can make additional one time, non-recurring contributions to a goal.
- You can end a goal at any time without penalty, but you will have to redeem the entire existing balance all at once. There are no partial redemptions.
- You can change your goal amount at any time.
- You can transfer funds in between goals instantly. There is a limit of five outgoing transfers per calendar month per goal. Accrued interest cannot be transferred and will remain in the goal where it was earned.
Emergency Fund / Partial Redemptions
Setting up SmartyPig as an emergency fund is straightforward. I set a big goal like $25,000, and then put in a regular contribution. But what if something comes up and I want to make a withdrawal of say $1,000 out of the $5,000 I’ve already set aside? According to the site, I must end the entire goal and cash it out completely. Not so fast. In this case, I would:
- Start a new goal, call it Emergency Fund 2.0.
- Transfer $4,000 from my original goal into the new 2.0 goal.
- Now, I should be left with $1,000 in my original goal, and I can cash it out by clicking on “Stop Goal”. I’ll also be cashing out all the remaining accrued interest.
- I am left with a new goal with $4,000 still earning 2.15% APY, and $1,000 is headed to my main checking account to pay for the unexpected expense.
“Boosted” Gift Cards to Multiple Retailers
Another perk of SmartyPig is the ability to redeem your cash goal for a retailer gift card with a “boost”. You can get a 1% bonus at Wal-mart, 3% at Lowes, 4% at Amazon.com (my fave), and 12% at Macy’s. So for a $250 goal, I could cash out for $260 at Amazon. By default, you can only redeem a goal for one retailer. But by using the method above, you can effectively split your goal balances into smaller chunks.