Archives for August 2010

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. 🙂

Ground Rules

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.

When I first heard about online check deposit a couple years ago, I was pretty excited. I loved the idea of scanning in checks from your home computer any time of day without the hassle of going to the bank or waiting for snail mail. But at the time only few banks offered it like selected credit unions and USAA, both of which had membership restrictions.

I actually forgot about it for a while, until I noticed last week that online bank EverBank started offering it on both their Yield Pledge Money Market and FreeNet Checking accounts. (See post on 1.10% Intro APY at EverBank.) Since I already had an account, I immediately signed up, tried it out, and am now hooked. How about a review for the curious?

Application Process

To be eligible, you must have an existing personal account (see above), and a computer with a TWAIN-compliant scanner (pretty much anything bought within the last five years).

1. Download the application form and fill it out. Don’t forget to fill out the Security Code at the bottom, as my first form was rejected since I didn’t know what that referred to (had to call customer service).
2. Fax or mail the form in. I found it amusing that in order to get online check deposit, I had to use a fax machine. Well, not really, you could just use a service like faxzero.com since there is no extra-sensitive information required on the form.
3. Wait for the welcome e-mail, which should arrive within two business days. The title will be “You can start using Online Check Deposit” and inside will be your new login and temporary password.

Making An Online Deposit

Here’s a flash video with detailed instructions, but it’s really long and slow-paced. Just read this:

1. Log in to the special website at www.EverBankOnlineDeposit.com. This is not the usual Everbank website, but it checks out legit. Log in with your separate login and password.
2. Click on the “Make A Deposit” link on the left. A java applet will load. The software will look for attached scanners. Choose the one you wish to use. [screenshot 1]
3. Scan the front of your check and approve it. [screenshot 2]
4. Scan the back of your check and approve it. [screenshot 3]
5. Submit after confirming the deposit details. [screenshot 4]
6. You’ll receive one e-mail immediately that your deposit was received.
7. Wait for the e-mail will say it was approved and processed. This should arrive either the same day or next day. At this point, your check is considered deposited, and you are supposed to shred or destroy the physical check.

Other Details

Another advantage is that you can gain access to your funds sooner (and also start earning interest). Here are the details for funds availability. I think I read that any check over $5,000 will still be subject to holds.

Same business day credit for deposits scanned, submitted, and approved before 7 p.m. ET on a business day. Deposits made after 7 p.m. ET or on a non business day will be credited on the next business day. See the Funds Availability section of the Account Terms and Disclosures for information on access to funds.

I got this all to work fine on the first try on a Windows PC, but I could not get it to work on Mac OS X. I called customer service and they indicated that it was common for Macs to have problems with TWAIN drivers. While they said they could help me work through it, it would be a tedious process and may have to be repeated each time I wanted to make a deposit. (Basically, if you have a Windows computer, use it instead.)

In the end, after getting set up the first time it was a total snap. I often hold on to check for days if not weeks until I get around to going to the bank. Now, it just takes a minute. Scan, flip the check over, scan again, and I’m done. If needed, I can even use their free online fund transfers to move the money elsewhere. I can’t believe the mega-banks don’t provide this option already.