With the growing number of financial apps on the market, it can be difficult to know which are worth your time and money—and which aren’t. After all, these personal finance apps can do everything from tracking bill payments to monitoring your investment portfolio to even keeping tabs on your credit score.
But if you’re looking for an app that will help you save money, Digit might be for you, especially when you consider 50% of Americans have less than $600 in their savings accounts. Digit uses a special algorithm to analyze your spending habits, bills, and cash flow before moving money from your checking account to a Digit savings account.
Learn how this personal finance app works, what it costs, what personal information it stores, and if it really helps you save money in the long run.
What Is Digit?
So what exactly does the Digit app do? The app analyzes factors such as your checking account balance, expected income, incoming bills, recent spending, and other personalized savings controls set by you to determine when and how much you can spare. Then, it automatically transfers a small amount of cash into your Digit account a few times per week or month, depending on your spending habits. In short, it helps you save money without even thinking about it.
There’s no required minimum for your Digit account, and you can withdraw your money at any time. Your funds are also FDIC-insured up to a balance of $250,000 and securely stored.
How Digit Works
To use Digit, you’ll need a bank account at another institution to connect to your Digit account. Available for iPhone and Android users, you can access your Digit account via the mobile app or via your desktop computer at digit.co.
Digit can help you set an unlimited number of personalized savings goals into which you can channel funds from your checking account in your Digit account. It can even take that money you save in your Digit account and make regular payments to monthly bills, such as your credit cards, student loans, or cell phone provider.
Use the app to save money for three consecutive months, and you’ll get a 0.1% annualized savings bonus, which will automatically be deposited into your Digit savings account.
You can also withdraw money from your Digit account at any time, with no monthly limits. Digit is compatible with more than 2,500 banks and credit unions and is currently available only in the U.S.
However, saving money with Digit isn’t free. The app charges a monthly subscription fee of $5. And if you want to instantly withdraw money from your Digit account to your checking account, the app imposes a fee of 99 cents, though you can choose to wait a day or two and pay nothing for the withdrawal.
Does Digit Really Help You Save Money?
If you’re wondering if Digit really helps you save money in the long run, the answer is that it depends. While tucking money away each month is good financial practice, your success in doing so depends on many factors. Think about your income, spending habits, cost of living, and the amount of debt you carry to assess whether this approach might help you save more.
Though the company doesn’t make average user savings readily available on its website, Digit founder Ethan Bloch has gone on record saying that typical savings deposits are around $18 every two to three days. So for the average user, that could equal $180 in monthly savings, or around $2,160 per year. Subtract the $5 monthly subscription fee, and you’ll see a savings of about $2,100 per year, without any immediate transfer requests.
Digit works because it’s based on automatic transfers from your checking to Digit savings account. You can do the same thing at your own bank. This would allow you to know exactly how much is being moved and when. While Digit varies the amount of each deposit based on your account and spending habits, you may enjoy directly managing your automatic savings transfers more.
Plus, it won’t cost you anything extra per month.
When you open a Digit account, the app collects personal information from you such as your name, email address, mobile phone number, banking information, age, gender, location, address, birthday, Social Security number, citizenship information, occupation status, and where your income is coming from. The app also collects information about your transactions, from third parties you might spend money with, and other information via cookies.
Digit uses this information for myriad purposes, from answering questions about your account to analyzing your spending in order to facilitate automatic savings and to transfer money to your Digit account. It also may display its own and third-party content that it thinks may interest you via the app.
Digit says it does not share your personal information with other financial companies, affiliated companies for their business purposes, or any third-party companies for the purpose of marketing to you.
You may also be nervous that the app’s automated transfers from your checking account to your Digit account could cause you to overdraft. But the app offers overdraft protection. If your account is overdrawn by Digit, it will reimburse the overdraft fees, but only for up to two instances. This means you may still need to keep a close eye on your checking account, including outgoing spending and incoming payments.
Additionally, Digit offers a few settings to help you prevent overdrafting your checking account. With the Safe Saving Level feature, if your checking account reaches a certain balance, Digit will stop saving money for you until it increases. You can also set a maximum daily savings limit to prevent Digit from saving too much money in one day. Last, you can always pause your account to temporarily prevent Digit from transferring new money to your account.
The Bottom Line
If you’re someone who isn’t great at sticking to a monthly savings goal, then Digit might be the right choice for you. After all, achieving a $2,100 annual savings goal isn’t anything to sneeze at. But for others who have the discipline, it may make more sense to cut out the middleman (and that monthly fee) and stash away $175-$200 a month on your own.