I started organizing all of my tax documents, and while I was gathering all of my 1099s, I realized there are several accounts I am no longer using and which I should close. One of those happens to be my SmartyPig account. When SmartyPig burst onto the scene a couple years ago, they promised to revolutionize the savings industry. And in a way, they did. For awhile, anyway.
SmartyPig added a social element to saving, and turned it into something of a game. To top it off, they added some of the best interest rates in the nation (at the time), and the opportunity to save toward a goal at high interest rates, then redeem your money for discounted gift cards, which in effect, would increase your savings even more.
Eventually, the depressed interest rates caught up with SmartyPig, and they had to continually lower their interest rates. In the process, they changed their business model so much that I declared SmartyPig is no longer relevant. Perhaps that headline was a little harsh, as they are still relevant. But SmartyPig is no longer as glamorous as they once were (feel free to insert your own joke about putting lipstick on a pig).
Basically, SmartyPig changed from emphasizing creating savings goals to ave money, to creating goals to spend money, with the emphasis on redeeming the money in your account for discounted gift cards or The SmartyPig Cash Rewards Card. Since SmartyPig no longer offers the highest interest rates in the country, I began to wonder why I still had an account with them. I couldn’t find a good reason to maintain *yet another account*, so I decided to close it.
How to close a SmartyPig account
The benefits of closing accounts are several, and primarily centered around better knowing where all your funds are so you can more easily account for them. Fewer financial accounts also simplifies planning and organization, tax time (fewer 1099 forms), and more. In short, the fewer financial accounts you have, the better off you probably are in the long run (provided you are meeting all your financial needs of course).
The first task when closing a SmartyPig account is to close out all of your active savings goals. The SmartyPig interface isn’t the easiest in the world to figure out the first time you use it, so I included a few screenshots. Since I didn’t want to share my savings goals with the world, I decided to create a new goal – just to close. Enter, the beer fund.
Once you click your account, then click the “close goal link above your goal. And no, I didn’t have a plan to save $250 for beer, though that would make for one great fiesta! $250 was the minimum savings goal, and my purpose for creating this account was just to close it for this tutorial (I didn’t want to share my true savings goal!).
The next step is to choose a redemption option.
Savings Goal Redemption Options:
Reaching your savings goals is what SmartyPig is all about, right? You save until you reach your goal, then you withdraw your money to pay for whatever it was you were saving for. SmartyPig even makes it easier for you to reach certain goals, especially if your saving goal was really a spending goal. For example, let’s look at the redemption options customers are presented with when they are ready to close a goal:
The goal redemption options, listed left to right are: retailer gift cards, followed by a SmartyPig Cash Rewards Card, followed by an ACH transfer. Here is the text from their website:
Retailer Gift Cards: Want to get the most bang for your buck? Retailer Gift Cards offer up to 11% cash back savings. Choose from retailers like Amazon, Macy’s, Travelocity, Chili’s and more. You can redeem your entire goal or just a portion. And while you’re at it, you might want to pick up a few as gifts as well.
SmartyPig Cash Rewards Card: Need INSTANT access to the cash in your goal? Want to earn up to 10% cash back at more than 9,000 retailers? The SmartyPig Cash Rewards Card is your best choice. Transfer your whole goal, or just a portion – anytime.
ACH Transfer: Prefer to transfer your balance back to your bank account. You can do that too
When you actually go to redeem your goal, you must accept or decline each of these options as well. Earning a cash savings of up to 11% sounds good to me. So I decided to check out the retail gift cards. Alas, SmartyPig didn’t offer many gift cards to stores I shop at frequently*, so I chose to redeem my savings for an Amazon Gift Card, which offered a cash savings of 3%.
*To be fair, I’m not much of a shopper, so I’m not a good litmus test for the quality of their offerings. I redeemed a gift card a few months ago and SmartyPig was offering savings of up to 14% for retail stores, and it seemed as though there were more options, but I’m sure the type of gift cards and savings vary by availability.
You will notice that I had $50.03 in my account, and the 3% cash savings on the Amazon gift card, left me with a total of $1.53 to do with what I pleased. Once you elect to redeem some or all of your funds for a retail gift card, you then need to decide whether or not you want to redeem some or all of your remaining funds toward The SmartyPig Cash Rewards Card. Since I only have $1.53 remaining on my card, I don’t think I’ll be choosing this option.
So I elected to transfer the remaining $1.53 via an ACH Bank-to-Bank Transfer. It feels kinda funny making an ACH transfer for only $1.53, but there was really nothing else I could do with it.
What’s Left to Close Your SmartyPig Account?
At this point I’m not 100% certain: the SmartyPig FAQ page lists this as their instructions for closing an account: To close one of your accounts or your profile, please first stop and close any existing goals. Once your goals have been closed, contact SmartyPig customer support at email@example.com and we will be happy to assist you. (I’m still awaiting a reply from my e-mail this morning, but they promise to respond within 1 business day). You can also try calling their customer support number: (888) 567-6278.
Pros and Cons Closing Your Account
First, I’m not recommending that everyone close their account. I closed mine because I realized I wasn’t using it, and life in the long run would be more simple with fewer financial accounts. SmartyPig still offers a good interest rate compared to the national average, but they are only about 70% of what the top banks are currently offering. In addition, their account isn’t designed to be used like most online banks with features such as online bill pay, etc. This is simply a savings account with the option of redeeming your savings for discounted gift cards. Since it is limited as a financial account, it is no longer good for my needs.
The primary benefit of keeping your account open is being able to buy discounted gift cards. However, that benefit was outweighed for me because it is easy to save money on every purchase by using online sites like Ebates for online rebates, or Plastic Jungle for discounted gift cards.
Final note: SmartyPig only offers 1099 forms via download, so make sure you print or download all applicable tax information before closing your account so you will have a copy for your records.