tMichaelB is the web site for Tom Bengtson, who writes about business, religion, family and politics.

Thursday, May 29, 2008

SmartyPig for the kids

I might just give each of my kids a SmartyPig account. This is a service dreamed up by a bank in Des Moines that sounds to me like a pretty good application of internet social networking.

SmartyPig.com is a savings account set up over the internet, which isn’t so unique. But here’s what’s new: the account holder can post a savings goal and others can contribute money to the account. So let’s say you have a high school kid who is saving money for a class trip to Chicago. The kid states his goal at his SmartyPig internet account. Friends and relatives can put money in the account on his birthday or at Christmas, or whenever they want. The giver gets the satisfaction of knowing that the money is going for something worthwhile. It is a little better than simply putting a $20 bill in with the birthday card.

There are a lot of internet bank accounts but this is the first one I have heard of that allows others to deposit money into someone else’s account.

The account has a few stipulations. First, account holders have to be at least 18 years old, but parents can set up accounts and designate a child’s saving goal so the account functions like it belongs to the kid. An initial deposit to open the account must be at least $25. Deposits are accepted as transfers from other established accounts.

Also, right now the service charges people $4.95 to make a deposit into another person’s account. The account holder doesn’t pay anything. I don’t really like the fee but I have read chatter about this account that suggests the fee will go down or go away all together. Nonetheless, if I have a niece or nephew saving money for college or a car or some other major goal, I would be willing to pay the fee in order to put $25 in their account at Christmas time.

I also think that this is a good way to teach younger kids about the importance of saving money. They all love the internet and they love using the computer, so why not marry those interests with something important like an appreciation for saving money? I can tell you that banking, otherwise, really does not interest them.

Like any bank account, the accounts are FDIC insured and they pay interest. The interest rate fluctuates, but as I write this, the rate is 3.9 percent annual percentage yield, which is not bad for a savings account.

So check it out, and let me know what you think.

1 comment:

Jon said...

Thanks for the post! Just wanted to let you and your readers know that we have completely reconfigured our public contribution and gift card fees. SmartyPig customers will be able to make contributions to other SmartyPig users’ goals and buy gift cards at NO cost if they use their existing SmartyPig funding source, i.e. their checking or savings account. Our fee to make a contribution or buy a gift card using a credit card will be set at a flat 2.9%, and we are also planning on releasing a few other payment options in the future, as well, so that using SmartyPig will be economical for all users.

Again, thanks! -Jon Gaskell, Co-Founder SmartyPig