I decided to check out Smarty Pig to see if this might be a product that our readers would benefit from using.  After all, it’s free!  That is a great plus on its side plus the fact that it focuses on savings.  So let’s begin by looking at what Smarty Pig is.

Smarty Pig is a method for you to be able to save towards set goals such as a trip, item, or gift.  It is designed to prevent you from going into debt to purchase that goal by saving for it ahead of time.  It appears to be an independent website meaning it is not visibly sponsored by a corporation or bank.  It says that it was found by Mike Ferrari and Jon Gaskell.  I did find that your funds are deposited with BVA Compass which is a trade name of Compass Bank, so they apparently have a partnership with that bank to provide financial services to Smarty Pig.

Smarty Pig does not charge you fees to deposit the money into your account, to transfer the money out, or to put them on a retailer gift card.  They definitely encourage you towards purchasing a retailer gift card and offer you “cash back” for doing so.  Typically in a situation like that, Smarty Pig would be earning a commission of some sort for you purchasing those gift cards.  There are some specific ways that you have to function with the goals and transfers, so it is not quite as flexible as your typical bank account.  I would be sure to read their FAQ if you are interested in checking them out further.  You are able to set up automatic payments from your bank account into your Smarty Pig account in order to make sure you save something each month, which is a plus.

Since they are not charging you as the user anything to use their services, I had to wonder “how do they make their money?”  So after doing quite a bit of digging, I finally found this under their Partnership Page:

SmartyPig enables its banking partners to capture sought-after deposits and critical information from prominent consumer groups such as Generation Y. This is accomplished by integrating the latest in Internet technology such as Facebook, Twitter and Get Satisfaction. By leveraging these banking relationships, other cross-selling opportunities, a robust affinity model and utilizing minimal overhead and headcount, SmartyPig has developed a profitable business model that is extensible to a global market.

In other words, it appears Smart Pig makes money off of information.  They are integrating internet technology, banking, and social media to be able to sell you products that would personally appeal to you which you may have gotten a hint of via the retailer gift card.  They want you to save money and consider using the retailer gift cards.

So in all honesty, this is not a product I would personally use nor really encourage others towards.  I find that I can do just as well with my savings via my bank or other investment method.  Most financial institutes allow you to set up automatic payments which is the main benefit of using Smarty Pig, and I can just as easily set up and track my goals using a site like Mint.com.