If you have trouble saving money you’re in now luck thanks to technology advancing at a scary pace.
Digit is a new 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
- 1% Annual Savings Bonus (paid quarterly)
- $2.99 Monthly Fee
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 promise to never overdraft your account. In fact they have a no overdraft guarantee.
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.
What’s the Catch?
There's a few different catches that you should be aware of. First, Digit costs $2.99 per month. They give you your first 100 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 $2.99/mo fee adds up pretty quickly. That fee is $35.88 per year. Given that Digit pays a 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 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.
Is Digit Savings Right for Me?
I’ve got to be completely honest with you – this service scares me. I have heard nothing but great things about Digit but from personal experience I am not a big fan of having money withdrawn directly from my bank account. My automation includes one deposit into a retirement account and certain freelance payments into savings.
I’m also pretty uptight about keeping my checkbook balanced. So clearly, I’m not the target market for Digit. I already have a pretty good savings habit. If you’re like me then Digit might not be right for you either.
However, if you have trouble saving money and are looking for an easy way to save Digit could be the perfect solution.
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!
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?