SmartyPig

We talk a lot about what people are saving for using SmartyPig. Almost all of the time these stories involve a very optimistic individual or family looking forward to a wedding or a vacation or a baby on the way. But there are other stories. They are no less optimistic, mind you. But they are tempered with some despair. They are about people who have been, or currently are, being held hostage by their credit cards, and are using SmartyPig as a way to get out from under.

To be honest, we have only heard from a few people who are using SmartyPig to actually help pay off high credit card bills. Mainly, we have heard from, and read about, people who are using SmartyPig to help reverse the mindset of \”buy now, pay later.\” Many are using SmartyPig as a way to save up for the next holiday season, while (OUCH!) still paying off last year\’s shopping binge. In fact, December 2008 is our most popular month for scheduled redemptions in the next year – by 3 to 1.

Here\’s why: According to the public policy firm, Demos, more than $2.2 trillion dollars was put on U.S. credit cards last year in purchases and cash advances. The companies handling those transactions charged $18.1 billion in late fees to their customers (R.K. Hammer). And that was before the current credit crunch. Currently, credit card default is up 30% – highest since 1992. However, as these big financial services companies have no intention of taking it on the chin, they have made the decision to raise their rates. The headline in \’USA Today\’ last week was \”Credit Card Rates Hustle Higher\”. According to the article, Washington Mutual told its customers that it was raising its rates by as much as 100%. Discover is raising its penalty rate to 31%. Bank of America has tripled its rates for some of its customers. Who is suffering? Often times it is folks who not only pay on time, but have had NO change in their credit history. \”Hustle\” indeed. In fact, the tactics are so brutal, federal regulators initiated steps last Friday to begin reining the hustlers in.

Coincidentally, MasterCard posted first-quarter earnings last week. The verdict? Profit more than doubled to $446.9 million. The stock is up nearly 30% this year. Why? Because in our economy\’s weakened state, more and more Americans are turning to plastic in order to survive. It\’s like McDonald\’s offering apple slices and salads after spending years making its customers overweight. The card companies have profited by putting you in a deep hole and now they\’re gong to profit even more while you are at the bottom, scraping like crazy to survive. Well, more and more we\’re seeing people who aren\’t going to be party to it.

So whether you want to teach your kids how to sensibly save so they don\’t end up where we are, or you cannot bear to grab your mail each day because of your past spending habits catching up with you, we know we can help you out. Reversing the mindset is the beginning, and the idea of saving up before buying something makes more sense than ever. In our opinion that old saying \”Christmas comes but once a year\” shouldn\’t include the stipulation that you\’ll be paying for it the ensuing eleven months. And with SmartyPig, you won\’t be.