If you have trouble saving money you’re in now luck thanks to technology advancing at a scary pace.
Digit is a company that might just revolutionize the way that people save money. They recently launched their app and it’s spreading like wildfire. But is Digit a great fit for everyone?
We named Digit one of our Top Automatic Savings Apps. If you're looking for a better way to save money, Digit could be a great fit for you.
Let’s find out in our Digit Review.
- Automatic Savings App
- 0.1% Annual Savings Bonus (paid quarterly)
- $5 Monthly Fee after 30 day free trial
Digit Savings – How it Works
The technology behind Digit is so smart that it scares me!
When you create a Digit account and link up your bank account Digit will take a look at your past expenses and income, determine what your future expenses and income are and then pull small amounts of money out of your bank account and into savings.
They generally pull $5-$50 every 2 to 3 days and have products and tools to help members avoid overdraft fees.
Digit works through text commands. If you want to withdraw money out of your Digit bank account you just text Digit “withdrawal: (insert amount)” You can do the same for your account balance and recent transactions.
All of the money that Digit withdraws from your bank account is put into a FDIC insured Digit bank account.
When you save with Digit for 3 consecutive months, your account is rewarded with a 0.1% annualized Savings Bonus. Your Savings Bonus is automatically deposited in your Digit account. This is like interest, but done slightly differently.
You can set up a Digit Investing account that will help you invest strategically for the long term, not for risky short term gains.
Digit looks for safe amounts to invest every day to a fund that can grow over time. This is a great way to save for the future, and is a similar product to what you see with Acorns.
Save For Retirement
Digit will match you with the right tax-advantaged retirement account based on your income and will save intelligently throughout the month, alongside your other other goals. Once a month, Digit will invest those retirement savings into a diversified portfolio.
There are no account minimums or fixed deposits so anyone can save for their retirement today. Even small amounts add up over time so you can start today and feel good about your future.
However, be careful mix and matching Digit with a traditional or Roth IRA outside of digit. There are strict IRA contribution limits you have to follow.
What’s the Catch?
There's a few different catches that you should be aware of. First, Digit costs $5 per month. They give you your first 30 days free, but then start charging.
If you're only saving $5 or so per month, this is an extremely high fee. It's similar to our complaints about Stash Investing review.
That $5/mo fee adds up pretty quickly. That fee is $60 per year. Given that Digit pays a 0.1% annualized bonus, you would have to have $3,588 in savings to break even. That's a lot of money in the account for what the app promises.
The second big catch is that this isn't technically "interest". Digit calls it a "Savings Bonus". This savings bonus is paid every 3 months - and equals 0.1% annualized. This is much less than the best savings accounts are earning right now, and in a savings account, you're paid interest monthly.
And it's a fraction of what the best CD rates are paying right now as well.
But to be fair, if you’re not saving any money then this could be a worthwhile solution for you. You just need to do a cost/benefit analysis of your savings habits and the costs.
Plus, the overdraft protection feature itself sometimes makes it worth more than the $5 monthly charge!
Is Digit Savings Right for Me?
Digit isn't right for everyone, but if you need to have something automatic force you to save (or pay down debt), this can be a great tool for you.
They’ll only pull small amounts of money out of your bank account based on your current income and expense pattern. And when you let those small amounts add up they can become something huge over time!
Digit reports that an average customer sees $300 to $500 in his or her account within the first couple of months without having to do anything. Considering 6 out of 10 Americans struggle to get to $500 in savings, this is a big achievement.
If you need that boost, this can be a great tool.
While Digit is one of the best automatic savings apps, there may be better choices for you. For example, we recommend Qapital as a strong alternative.
To get started with Digit, you can sign up here. After that you just link up your bank accounts, verify your phone number and they’ll do the rest of the work for you – never taking large sums out of your bank account, only small amounts that you won’t miss!
What do you think? Are you brave enough to try Digit?
- Savings Options
- Ease Of Use
- Customer Service
- Commissions And Fees
Digit is an app and tool that helps you save money automatically by pulling money from your checking and depositing it into your account.
- Easy automatic savings
- Chatbot feature to trigger savings or commands
- Savings bonus that acts like interest
- It’s not free, and the fees may not be worth it
- It only works with one checking account at a time
Alexa Mason is a freelance writer and wanna be internet entrepreneur. She is also a newly single mom to two beautiful little girls. She chronicles her journey as a single mom trying to make it big at www.singlemomsincome.com.