Review of: Digit
Reviewed by: Carrie Smith
Last modified: February 15, 2018
The Digit app makes saving money as easy as texting. It offers a friendly way for individuals who are just starting out. Unfortunately, expect a one percent return on your savings, and at $2.99/month, this service isn't free.
If you’ve ever tried to create a savings habit, you know how difficult it is to get started. After opening a separate savings account, you begin to put as much money as possible into it each month.
But then, after a few weeks, an emergency inevitably happens and you need to use the money. Now you’re back to square one.
This is where a service called Digit can help.
What Is Digit?Digit is a microsavings platform designed to help you save small bits of money over time. As with the Acorns app, you won’t get rich off the money you save with this service, but it does initiate that first step toward creating a savings habit and building wealth.
“Digit believes anyone can start saving regardless of income,” says CEO Ethan Bloch. “While everyone understands the importance of saving, it’s hard to get started. Digit’s goal is to make saving as easy, stress-free, and automatic as possible,” explains Bloch.
“Digit fits into the lifestyles of people who grew up on the web and look to technology, like Uber, Instacart, and Venmo. They trust tech and use it daily to simplify their lives,” says Bloch. In other words, if you’re looking for a tech-assisted automated process to start saving, Digit allows you to do this with zero effort on your part.
You can use the money you save in your Digit account for a summer vacation or small emergencies like car repairs. Because of Digit’s micro-savings format, it’s not likely it will propel you towards a car or a down payment on a new home.
|Mobile Access||iOS App, Apple Watch, Android App, SMS|
|Promotions||Try Digit FREE for 100 Days|
- Digit Savings Bonus — All customers earn a 1% annualized Savings Bonus for every three months that they save with Digit.
- Text Messaging — In addition to iPhone and Android apps, you can communicate with Digit’s service via text (SMS) messages. These allow you to perform all your regular banking transactions, such as viewing your balance, initiating withdrawals, saving extra money or even viewing upcoming bills, without using a computer. For example, if you want to pause your savings, simply text “PAUSE” to Digit’s number.
- Same-Day Transactions for Chase and Wells Fargo Clients — If you use Chase or Wells Fargo bank, you can receive same-day transfers to and from Digit.
How Does Digit Work?
Digit evaluates your spending habits and transfers money from your linked bank account into your Digit account. In my experience, the average transfer each time is around $9. Sometimes it’s as much as $14 or as little as $2, depending on what the balance is in my personal bank account. Digit Savings are FDIC insured up to $250,000.
Here’s a bit about how the microsavings service works and how to get started:
“Digit studies day-to-day spending and income history looking for daily savings opportunities consumers won’t notice. Every 2 or 3 days, Digit transfers some money from a checking account to a secure Digit account. The four main signals that influence Digit’s savings include checking balance, upcoming income, upcoming bills and recent spending patterns. From these variables, Digit derives a non-essential amount you won’t notice based on how you’ve been spending. There is never a transfer of more than you can afford, and there is a no-overdraft guarantee.”
|Mobile Access||iOS App, Apple Watch, Android App, SMS||iOS App, Apple Watch, Android App||iOS App, Android App|
|Promotions||Try Digit FREE for 100 Days||None||None|
|Review||—||Read the Review||Read the Review|
How Does Digit Make Money?
As of April 11, 2017, Digit charges $2.99 per month for their service.
Digit isn’t set up for large savings goals. Since the withdrawals are based on the money in your checking account, unless you have an outstandingly large bank balance, your savings will be minimal. Digit was created to help anyone save money, no matter your previous savings history or bank balance.
What Would Make Digit Better?
With its simplistic idea, Digit is focused on helping you save small, affordable bits of money each week. You won’t get rich using Digit.
They’re honing in on the tech-savvy Millennial marketplace with their innovative text-message savings feature and habit-forming method of getting you to save money on a regular basis.
One thing that would make Digit better is having a more concrete formula for how they calculate your savings transfers. Their current method is much too vague and actually turned me off to their service in the beginning. I tested it out only because a trusted friend used and recommended their service. If nothing else, they do offer a no-overdraft guarantee on your checking account.
Pros and Cons
- Automatic Savings — Digit's service makes saving simple and as easy as sending a text message. In fact, you don't have to make any transfers if you don't want to.
- Simplified Goals — With one savings account, you can simplify your goal and work toward one small short-term savings goal. No distractions and it's easy to stay on track.
- Save Without Thinking — Once you set up Digit it's easy to set-and-forget your savings with them. Next thing you know, you have some vacation or fun money saved up.
- $5 Referral per Signup — Get $5 for each friend you refer to Digit's service.
- $2.99 Monthly Fee — Digit costs $2.99 a month to use their service.
- Cannot Perform Transactions via the Website — You cannot make deposits or withdraw money via Digit's website.
- Unexplained Savings Algorithm — After questioning Digit's team and CEO directly, I still have no idea how they determine how much money to transfer into your account every few days. If you don't want to give up the control of your finances, you may not like their vague algorithm.
- Small Savings Interest — The way Digit makes money is off of the interest your savings account makes while paying you only a very small portion based on the money in your account.
- Not for Long-Term Savings — Digit won't make you rich and it's more difficult to save money towards a larger goal, like buying a home or retirement.
I am now a believer in their service and recommend you check it out as well. Like Acorns, I’m viewing it as a diversified stream of my financial portfolio. Along with using Betterment for my retirement needs, Digit adds a bit of fun to the mix for short-term savings goals.