Webware

Here's a clever site that can help you sock away money for purchases you're hoping to make some day: SmartyPig. You tell it what you're saving for, how much it costs, and when you want to buy it, and it will tell you how much you need to save each month (hard math, that). Then, if you let it, it will automatically deduct that amount from your checking account each month until you make your goal.

It pays interest, too (currently 4.3% APR). Plus it lets other people contribute to your fund--if you like gifts of the monetary kind. There are widgets for social site profile pages. And in a final twist of clever business, once you reach your goal, you get your money in a Mastercard debit card or you can take payout in a gift card. The gift card option will get you an extra bonus, up to 5%, depending on the retailer. SmartyPig buys gift card dollars in bulk, and at a discount, so the company makes additional revenue every time someone wants their money this way.

SmartyPig is not monetary rocket science. It's really an exercise in retail financial packaging. The company works exclusively with Iowa's West Bank (chosen by the founders due to its proximity to their homes and its reputation, I was told). There's nothing wrong with this at all, but SmartyPig is not a service you could plug into your existing Bank of America account if you wanted to.

And there are some odd restrictions: You can't take your money out in cash nor have it transferred to another bank for free. Withdrawing by check costs $25. You can, though, close your account at any time and get the debit card. Co-founders Jon Gaskell and Mike Ferrari told me they are looking at other withdrawal options. But, as Gaskell told me, the symbolism of the gift card or the debit card is important to SmartyPig customers. ""People like the idea of having the goal and sticking to it, and not using SmartyPig like a bank bank." The service makes it easy to save and easy to spend the savings on what you've saved for, but not quite as easy to shovel your savings back into your general checking account. That's by design.

Make your savings goals public.

SmartyPig is the weirdest online savings account I've seen, but it appears benign. It brings a disciplined approach to savings to consumers. And if SmartyPig isn't right for you but you think it might be good for someone you know, you can--surprise!--buy the other person a gift card to SmartyPig itself to get them started on the service.

See also Some Notes on SmartyPig in The Simple Dollar. And Leverage: A bank for your gift cards on Webware.com.

On Monday, November 26, Leverage will open up its gift card management service. It will be the place for you to register all those plastic cash cards you get from people who want to give you a gift but don't want to give you a gift. The service will track all your cards and the balances you have on them, let you buy and swap cards, send offers your way from the retailers whose cards you're holding, and pay you interest on the unused balance on your cards--which is weird, when you think about it for half a second.

Paying interest on the cards is bizarre because Leverage isn't actually holding onto money for you that it's putting to work to make money for itself, which is how interest normally works. Instead, Leverage pays interest as a gimmick to get you to use the service. It pays out 3.65 percent APR for cards purchased on its site, 1 percent for cards you purchase elsewhere, provided Leverage's system has a link to the card's issuer and can confirm its value.

Leverage knows how much money you have left on your gift cards.

(Credit: Leverage)

I can see good value in this service for consumers. It's a lot easier to check a single site for information on the cards you have, compared with the alternative: manually tracking your cards' leftover values, or finding the issuers' sites to look up cards one by one. Also, since Leverage knows the stored value of each card that's registered, it can enable the fraud-free exchange of cards among users. Leverage co-founder Jennifer Mathe told me there's about a 30 percent fraud rate on gift card sales on eBay.

The value to retailers, though, is even better: through this site, they now have a way to reach people holding their cards. They can send them discounts or offers to get them to spend their stored cash. One might think that issuers would rather not remind people that they have a credit, since unspent cards or "breakage," are free income for them. But since half of cardholders spend more at a store than the value of the card they have, and since they're more likely to shop at a store again once they've purchased something there the first time, there's a real benefit to the stores to get cardholders to spend down that money. Leverage charges retailers for access to this marketing channel.

Leverage also sells cards directly, as I said, and that's another revenue stream, since it buys them at a discount to face value.

When I talked to Mathe and Leverage CEO Mark Roberts, they told me that they had links into the gift card programs of 72 retailers, such as Home Depot (the biggest gift card vendor of them all), Macys, and Barnes & Noble. They hope to have 100 vendors lined up by the time they launch next Monday.

Personally, I don't like gift cards (money is such a coarse gift), but I do like this business. It's a bit like Mint (Webware review) for stored value. It won't spend your money for you, but it will tell you where it is and how to use it more wisely.

See also: Points.com.