A few weeks ago, I previewed the SmartyPig savings account, an interesting way to collaboratively save money for goals while earning interest on that money. I like the ease of sharing goals with friends and family and allowing them to contribute, but the redemption options were limited.
By design, SmartyPig prefers that once you reach your goal, you redeem your principal plus interest in the form of a pre-paid debit card or a gift card for a participating retailer. If you want to redeem your funds in a more traditional, less consumable manner, you’d have to call customer service and pay a $25 fee.
SmartyPig announced today that they are eliminating the $25 fee immediately, and soon, those withdrawing their funds after reaching their goals will also have the option of an ACH transfer. I applaud SmartyPig for listening to its customers. Here’s the full email:
I had a very interesting conversation last week. It was with a young lady saving for a down payment on her first home with her fiancée. They want every penny they can scrape together funding that goal – especially the presents she is anticipating receiving when she finishes up graduate school later this spring.
They thought they had found the perfect way to reach this goal faster when they stumbled upon SmartyPig, she told me. They were really excited about the public contribution piece and the social nature of SmartyPig. They thought the widget would draw attention and letting friends and family members know about their goal would keep them focused. Just one problem, she told me: they couldn’t use the SmartyPig debit card to make that down payment.
I was told we were alienating a huge group of people – people with bigger goals – by not offering a free way to get your savings and interest back where it came from. When I suggested that SmartyPig was created more for smaller, short-term goals she basically told me it should be for everyone who wants to share in their experience of saving. The next day, when my business partner, Mike Ferrari, and I spoke to a mother who is using SmartyPig to not only teach her 10- and 12-year-old sons how to save “in a cool way,” but is using SmartyPig to help them save up for their cars when they turn 16 and made mention that we shouldn’t punish people for having bigger goals, we hung up the phone and decided she was right: for everything else there isn’t always MasterCard.
These were not isolated incidents of “push back” regarding our process, mind you, but they were enough to get The SmartyPig Team around the table to make the quick decision that from here on out there would be no $25 fee for not selecting one of our two redemption options. In fact the fee will disappear entirely – effective immediately.
In the very near future this process will be fully automated. For now, customers who want to close a goal and receive their savings plus interest in the form of a check simply must call customer service when they have reached their goal – just like now, only no fee.
When our site update is complete, the customer will have a third option when he or she has reached their goal: an ACH transaction back to their checking or saving account. Checks will no longer be available. For our customers’ security, funds will not be available for transfer until 10 business days after their initial deposit has cleared, as long as there are no other pending transactions (such as a gift heading your way). After this initial hold has expired, funds that have been on deposit may be withdrawn 5 business days after the most recent transaction has cleared.
We want our customers to know that we can adapt quickly when it is important to them that we do so, like we did when we changed our policy regarding public contributions. SmartyPig remains all about having a goal, funding that goal, having friends and family help, and, in the end, getting more money for your money. However, we learned that in some cases a customer’s goal doesn’t always fit in our model. Well, we want to be the place for anyone who wants to sensibly save for a goal, so we had to tweak the model.
Updated October 13, 2010 and originally published April 13, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.