Since this writing, SmartyPig has removed many of the fees associated with their accounts and so is not as bad as this post makes them out to be.
If you read any other personal finance blogs, you probably have seen a lot of posts about this new type of savings called SmartyPig, run by West Bank. They bill themselves as a different kind of bank account and they’re sporting a pretty healthy 4.30% APY savings account, until you realize that they’re charging you some ridiculous fees!
Here are the fees from their Terms & Conditions:
Contributing funds to a public account via ACH, Electronic Check and Credit/Debit Card, a $4.95 processing fee per contribution will be charged to the purchaser.
Purchasing a physical or electronic gift card via ACH, Electronic Check and Credit/Debit Card, a $4.95 processing fee per card will be charged to the purchaser.
Unsuccessful attempt of transfer of funds, $25.00 per occurrence will be charged and debited to the customers ACH bank account.
Replacement of a lost, stolen or discarded SmartyPig MasterCard® Debit Card is $20.
Requesting funds on a check in lieu of placing funds from a Savings Goal on the SmartyPig MasterCard® Debit Card or Retail Gift Card will incur a $25 processing fee. To complete this transaction, the Primary Account Holder must contact SmartyPig Customer Support. Not available to minors. Waived when required by law.
Overdrawn accounts will be charged a $27 fee per overdrawn item
I’m not going to rehash the point and purpose behind SmartyPig, for that you can hit up one of the posts above, but to the untrained it eye it sounds a whole lot like you’re paying a lot for the opportunity ($5 each time someone contributes, how does that motivate saving?) to help someone save. Not only that, but the end product isn’t even an ACH deposit into the saver’s account, it’s a debit or gift card (minus $4.95)! (if you want an ACH transfer of funds, that’s $25 please)
This seems like a raw deal, is anyone else seeing this differently? (though do enter those contests for a free $100)