Digit is rebranding to Oportun (read more).
Digit is a service that helps you automate and separate your savings (you guys know this is right in my wheelhouse). Automating savings can help you save for financial goals without knowing its happening.
Digit connects to your checking account and uses an algorithm to make automatic withdrawals every few days (depending on your balance and spending habits), and deposits the funds into a separate, but non-interest bearing savings account.
In the first five months of using this service, Digit has made 48 transfers and I’ve saved $1,191.90.
How Can You Save Money Using An App?
When it comes to saving for the future, most of us fail miserably. We have a tendency to spend money and then we try to fund our savings goals if thereâ€™s anything left.
By using money saving apps that automate savings, we pay ourselves first, which moves us closer to our goals. It puts our money to work in the areas we truly want it to go.
Apps, like Digit, do what our brains won’t. Objectively asses the situation and save in real-time. Saving small amounts on a regular basis is much easier than trying to save the occasional lump sum. Other apps, such as Chime, round up your purchases and save your “change” each time you use your card.
These apps are a great way to jump-start your savings in a way you may not even notice. If you are having trouble getting your emergency fund started I highly recommend these types of apps to begin the savings habit.
Why Would You Do This?
- Saving money is important
- You want to kick-start an emergency fund, vacation fund, Christmas gift fund, or whatever
- You’re having trouble making progress with your current savings methods (manual transfers, waiting until the end of the month, etc.)
- You care about results more than interest rates at this time. Although Digit does pay a 1% annual bonus (paid out every three months) on your balance
- Automating and separating your savings works! And your boy PT preaches it regularly
What is Digit?
Digit is an automated money-saving app. Itâ€™s designed for people who arenâ€™t natural savers, so they can save money passively. Digit launched in 2014 and has quickly grown to be one of the more popular personal finance apps on the market. This micro-savings app can help people achieve financial goals while running quietly in the background of their financial life.
How Does Digit Really Work?
When you connect Digit to your checking account, it starts analyzing your balance and spending over time. After a few days, Digit will transfer a small amount from your checking account into your Digit account.
“In my case, I opened my Digit account on January 15th and my first transfer ($14) happened on January 22nd. Over the course of five months, I’ve averaged a $25 transfer every 2.62 days.”
Digit uses an algorithm to determine how much is safe to transfer out of your checking account. From my experience, it starts slow and small and as it gets more comfortable with your spending habits it starts to ramp things up.
You have full control over Digit at all times. You can tell it to pause, save, withdraw (from your Digit account) at any time.
Digit uses your phone’s messaging to inform you of the progress and to allow you to control the account. Digit now has both an iPhone and Android app.
You still have access to a browser-based dashboard where you can pause saving, close your account, or change your connected bank accounts.
Is Digit safe?
Security is important to Digit. They use the latest security measures to ensure you are protected. All of your personal information is anonymized and encrypted. Consumers can relax, knowing that Digit goes out of their way to protect users.
Your money is safe using Digit too. All funds secured within Digit are FDIC insured up to $250,000. Linking your financial accounts to an app can be a scary thought. Digit works hard to ensure that both your identity and your money are protected.
Is Digit legit?
Digit is legit. They keep your money and personal info safe and offer a valuable service that will benefit many people. Itâ€™s a great option for people who have a hard time saving money. There is a $5 monthly fee attached to using Digit so be sure to weight if the investment is worth using their service to save money. If you need to help or are just too busy to do it yourself, Digit could be a wise choice.
Using Digit isnâ€™t going to make you rich, but it can help you develop healthy saving habits while settings aside hundreds, if not thousands. You could use these funds to create an emergency fund or save towards another financial goal. If youâ€™re already in control of your finances and regularly save money, Digit may not be a good fit. But if you have consistent spending habits, Digit will find extra money and set it aside automatically. Youâ€™ll be on your way with your savings thanks to Digit.
Can You Trust Digit?
I haven’t experienced any issues. More importantly, the bank account Digit uses to hold your savings is FDIC insured up to a balance of $250,000.
If Digit overdrafts your checking account, they will pay the fee.
How Do You Get Started?
To get started, head to Digit.co and sign up. You’ll need to connect your current checking account and give Digit your phone number and email address. Get started and let me know what you think in the comments below.
Note: After the first 30 days, Digit has a $5 monthly fee and they pay a 1% annual bonus out every 3 months. Keep $6,040 in the account and the bonus negates the monthly fee.
Digit Alternative: Empower
If Digit doesnâ€™t work for you, another app to check out is Empower. Itâ€™s more than just an automatic savings app. It combines saving with budget tracking and even a checking account.*
*Empower is a financial technology company, not a bank. Banking services provided by nbkc bank, Member FDIC.
Empower allows you to automate your savings. Think of a goal and set a target you want to save weekly or monthly. Empower will continuously analyze your income and expenses to set aside the right amount of money at the right moment in time.
All of your saved money goes into an AutoSave Account.* Empower makes up to four transfers to your AutoSave Account weekly. If you’re unable to hit your savings target in one week, Empower will try again the following week. There are no transfer or overdraft fees plus you get unlimited withdrawals which means maximum flexibility for you.
You’ll also receive practical real-time alerts from Empower when you link your financial accounts. The more accounts you link, the more Empower is able to help you make better financial choices. Notifications include bill increases, bank fees, missed payments, credit utilization, and more.
Empower lets you create a budget that makes sense for you, using customized spending categories. Iâ€™m talking about actual customized categories, like coffee, ridesharing, clothes shopping, drinks, and much more. If you spend money on it, you can create a spending tracker for it.
As you spend money, Empower tracks it and keeps you up to date as needed. Customers can set up notifications and alerts so you know when you are close to hitting spending limits. Youâ€™ll even have access to monthly reports to track your progress to stay on track.
For those interested in a checking account, Empower has you covered. Empower deposits are FDIC insured up to $250,000.* It comes with a debit card and has no account minimums, and unlimited transfers.
The first 14 days are free. After 14 days, thereâ€™s a monthly $8 charge for continued access to Empowerâ€™s services, which includes all of the great features I mentioned.
Empower Cash Advance
Empower goes a step further than automating savings and budgeting. You can also get an Empower Cash Advance using the app. Sometimes life and your finances donâ€™t go as planned. Because of this, Empower gives subscribers the opportunity to receive up to $250^ in cash that you can pay back later.
To receive your advance, simply make a request for a Cash Advance in the app.
To receive an advance there is no credit check, no interest, and no late fees but there are some qualifications you must meet before youâ€™re eligible for a Cash Advance like having regular direct deposits, account history, and your average monthly direct deposit. In some cases, you may be approved for less than $250 based on your eligibility.
The repayment of your advance begins on your next direct deposit as Empower determines based on your direct deposit cycles.
Empower is a money-saving app for sure, but it also works hard to improve your overall financial health.
^ Eligibility requirements apply.
Other Money Saving Apps
Acorns is a micro-investing app that uses â€˜round-upsâ€ to automatically invest money for you. If you make a purchase for $4.15, Acorn rounds the amount up to $5 and then transfers the difference into your Acorns account. When you reach $5, the money is transferred to Acorns’ robo-advisor. The money is invested and managed by Acorns.
Acorns also now features an Acorns Spend checking account. This enables you to invest while you spend. You get a debit card, free bank-to-bank transfers, and free or fee-reimbursed ATMs nationwide. Acorns Spend saves and invests for you instantly as you swipe your debit card. By paying the $3 monthly fee for the comprehensive Core, Later, and Spend accounts with Acorns, you’ll get all of the basic and advanced features listed here.
Check out our full review of Acorns here.
Chime is a mobile banking app that automates saving through â€œround-ups.â€ With Chime, you can round up your purchases and move the extra change into your Chime savings account. Chime customers can also set up automatic transfers of a portion of their paycheck directly into their Chime savings account.
Chime has no monthly fees, minimum balances, or overdraft fees. Your Chime account comes with a Chime Visa debit card too.
Qapital offers goal-driven banking. Customers can link a checking account to their Qapital account and then set goals they want to reach, like saving for college or a family vacation.
Once goals are in place, customers can choose from eight savings rules that automatically funnel money to fund your goals.
Using Qapital does require a checking account. It also carries a monthly membership fee between $3 and $12, depending on the account type.
Simple is another mobile banking app that uses round-up rules to build up savings automatically. Once you set up rounding rules, any debit transaction rounds to the nearest dollar and the extra change is automatically transferred into a high-yield goal-based sub account.
Simple comes with a free checking account and debit card. It also features several budgeting tools and savings sub accounts.
Another cool feature is called â€œSafe To Spend.â€ As you look at your account details, youâ€™ll see your account balance, but also entries for upcoming expenses, goals, and scheduled payments. Safe to Spend lets you see how much money is available after all of those expenses, so you can spend without the worry of messing up your budget.
Stash is a micro-investing app that allows you to get started investing with no minimum balance. Stash provides an investment template of exchange-traded funds (ETFs) and individual stocks for your investments.
Stash also has banking features, like a debit bank account and debit card. Thereâ€™s even a Stock-Back rewards program that lets you earn stocks and funds back on purchases made with your Stash debit card. There are fees for a Stash account, ranging from $1 to $9 monthly.
Check out our full review of Stash here.
Varo is a money-saving app and checking account rolled into one. Varo customers can set up a free checking account through Varo. Checking accounts have no minimum balance requirements and no fees for just about anything. Thereâ€™s also a Varo Visa Debit card that comes with your account.
Varoâ€™s high-yield savings account has no minimum and earns 1.92% APY. Customers can earn 2.80% APY by meeting a few requirements:
- Make a minimum of five Varo debit card purchases each month
- Receive total direct deposits of $1,000 or more in the same month
- Savings account balance up to $50,000.
Varo automates savings in two specific ways: â€œSave Your Payâ€ takes a percentage of your any direct deposits and transfer it to your Varo savings account. Through â€œSave Your Change,â€ all of your debit card purchases are rounded up to the nearest dollar and the extra change is transferred to your Varo savings account.
Get Control of Your Finances
While itâ€™s great that these apps exist and offer features like this, itâ€™s also important to not manage your finances on â€œauto-pilot.â€ These apps can create some savings, but being actively engaged in your finances is even more important. This is how you truly can save money and meet your financial goals.
Use these apps as a push to get started, but when you are feeling more empowered and see the benefits of savings, start taking more control.
Have you ever used this type of savings apps? How did it work out for you?