Smartypig offers one of the best interest rates for a savings account. At 3.25% APY, it’s not going to make you rich. But, in a world where putting $100 in the stock market a year ago would leave you with $61 today, having a savings account with $103.25 a year from now sounds pretty darn good.

Smartypig allows (forces) you to set up specific savings goals – like a family vacation or a down payment on a house. You can’t just put money in to the account, it has to be associated with a goal. This makes it harder to game the system and place all your savings into smartypig.

Like any curious thriver, you’re probably wondering how smartypig makes money? There are two main ways that I can see:

• Retailers Gift Cards – Smartypig negotiated discounted rates with retailers for store cards. If you have a goal to buy a TV, you can get a best buy gift card through smartypig. The website claims retailers will give you an “up to 6% boost” to the value. I’m guessing they collect money on the difference between what they pay the retailer and what they charge you for the card.
• Float – In smartypig it takes 3 days for transfers in to become available in your account. During that time, Smartypig is collecting the interest on your money. With enough people and money, the slight inconvenience to you is a good stream of revenue for them. They also delay the withdrawal of money to collect interest in the same way.

Is it good for you?

It can be, but it should be more of a complimentary savings account than your primary savings account. If you use it as it is designed, you’ll be saving for specific goals in no time at a reasonable interest rate. If you were going to do this anyway, why not use smartypig? Personally, the extra little bit of interest won’t poach me away from the competitive rate and ease of my ING Direct account.