The Digit app will build your emergency fund for you, and you won't even notice the money leaving your checking account
- Digit is an intelligent app that helps you save money from a checking account on a regular basis.
- The app analyzes your spending and makes transfers from a linked checking account to a dedicated Digit savings account.
- Digit is designed to save money at times when you are able to afford it so you don't overdraft and don't neglect your savings.
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Digit is a unique personal finance app that helps you automatically save money on a regular schedule. When you sign up and connect Digit to your bank account, it will automatically look at your spending and move funds to a Digit savings account.
It offers an innovative approach to saving money, but it also comes with a monthly subscription cost. Let's take a look at how Digit works and whether or not it makes sense for you.
What is Digit?
Digit is an app that helps you save money every month without thinking about it. For a $5 monthly subscription fee, Digit connects to your checking account and learns about your income patterns and spending habits.
Based on that information, it makes transfers from your checking to your Digit savings on a regular basis for amounts that it calculates you can afford.
I signed up for Digit right away when it came out in 2015. I found Digit to be like a fun game. I didn't know what days it would decide to save or how much it would move from checking to savings.
How Digit works
Digit makes saving money really easy. One of the hardest parts about saving is remembering to move money from your checking account to your savings account. You can set up a recurring transfer at your bank, but some people worry about overdrafts. Or they might worry about saving too little or too much. Digit takes those worries away.
Digit picks the days and amounts to save. According to the Digit website, the average user saves $2,200 per year. You can set goals like an emergency fund, a big trip, or anything else you want. Most people save toward three goals, but how and if you want to designate any specific goals is up to you.
Digit can automatically use savings to pay down credit card debt. This is a huge value for people paying expensive interest on credit cards every month.
If Digit makes a mistake and accidentally overdrafts your account, the company will pay for any fees, up to twice per year. In my case, I never had any worries of overdrafts and Digit didn't take me too close to the bottom of my checking account for comfort.
You can also withdraw back to your checking at any time with no limits. If you save for three consecutive months, you'll qualify for a 1% savings bonus. This is better than most bank savings account interest rates, but below what you can get from the top online savings accounts.
How I used Digit
When I signed up for Digit, it was free to use. I canceled when they added the monthly fee in April 2017, but if you need help saving, paying off debt, or just think Digit sounds really useful for you, it could be worth the $5 monthly cost. That's up to you to decide.
I kept my Digit account for quite a while and saved thousands of dollars. I used Digit to save up to a certain target and then transferred the funds into an investment account to buy stocks. I still have many of them, and Digit made it easier to save.
The savings bonus is interesting, but the rate isn't quite compelling enough to justify keeping your money there forever. But if you use a traditional brick-and-mortar bank, it is a huge step up.
The bottom line
You can do a lot of what Digit does with recurring transfers from a free savings account, but not everything. The automated, intelligent savings algorithms are pretty cool. If you're looking to pay off debt or have trouble saving, Digit may be worth the cost.
Digit can help you build good financial habits without thinking about it. Before you know it, you could have that emergency fund saved up, be on the way for that exciting trip, or for any other goal you need savings to reach.
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