Table of Contents
- How Digit Works
- In-Depth Digit Review
- Saving Money
- Withdrawing Money
- Digit Features
- Savings Bonus
- Goal Setting
- Safe Saving Level
- Max Daily Save
- Overdraft Prevention
- Credit Card Debt Reduction
- Student Loan Debt Reduction
- Digit Retirement
- Is Digit Safe?
- Pros and Cons
- Who Should Use Digit?
- Alternatives to Digit
Have you ever pulled a coat out of storage, slipped it on, and discovered twenty bucks in the pocket? It happened to me recently and I was thrilled. (full disclosure: it was only $12, but I was still happy!)
That moment of serendipity is what Digit is trying to achieve with their micro-savings app. Digit automatically moves money from your checking account to your Digit savings account in amounts it doesn’t think you’ll even notice.
This Digit review can help you see how easy it is to save small amounts of money and continue paying your monthly bills.
How Digit Works
The process for saving money with Digit is straightforward.
You start by linking a checking account. Digit analyzes your banking activity and transfers a small cash amount every 2-3 days into your Digit account.
The transfer amount should be small enough that amount they think you won't miss based on your spending activity. Your Digit account doesn’t earn a ton of interest but you’ll get a 0.1% annual savings boost on the balance you keep with Digit.
Digit offers tax-advantaged retirement accounts too if you want to start building a nest egg.
Digit is free for the first 30 days and then costs $5 per month going forward.
It’s possible to save for one goal or multiple goals at once. You can even have Digit send extra monthly payments directly to your credit card or student loan servicer.
There are also several overdraft protection tools that can prevent account overdrafts. You might have Digit only save money when your checking account is above a specific amount. There’s also free overdraft fee reimbursement in case Digit withdraws too much.
You can safeguard your account by only enabling withdrawals if your checking account is above a certain amount. Another option is placing a maximum withdrawal limit if you feel that Digit is withdrawing too much at once.
When you’re ready to withdraw your funds, most transfers take one day to complete.
- Here are some facts about Digit:
- Funds are FDIC insured up to $250,000
- Automatic savings can pause anytime you want.
- You don't earn interest but you earn an annual 0.1% Digit Savings bonus. Digits pays your bonuses quarterly.
- You can earn $5 for each friend you refer (links in this post are referral links)
In-Depth Digit Review
If you’re looking for an effortless way to save money each month instead of accidentally spending it, Digit can be your best option. Here is what Digit has to offer.
Signing Up for Digit
I signed up earlier and after a couple of weeks, Digit had squirreled away some cash:
Part of me was a little hesitant to sign up, and thus write about Digit, because I felt that Digit enabled bad money habits. You shouldn't be tricked into saving money with little transfers you won't notice.
You should be smart and diligent about your saving. You should set goals and regularly transfer it yourself, or schedule them yourself. You should take deliberate action.
But that's also unrealistic. As a Wallet Hacker, we should put systems in place that enable good results because in the end that's what matters. Life happens and as Derek Sivers has said, “If [more] information was the answer, then we’d all be billionaires with perfect abs.”
I'm idealistic but I'm also pragmatic, this type of automatic savings can help.
Enter Your Phone Number
You start by entering your phone number, get and type in a six-digit confirmation number, and are whisked away to link up your bank.
It’s possible to join Digit if you have a United States-based bank account.
Link Your Checking Account
After confirming your phone number, the next step is linking your checking account. Digit uses Plaid to sync your account yet doesn’t store your bank account details on the Digit platform.
Many budget apps with account linking also use Plaid to quickly link to over 2,500 banks and credit unions while protecting your privacy.
You can only link to one checking account at a time. If you have multiple accounts, use your primary account that you use for direct deposits and paying bills. Doing so lets Digit more accurately analyze your spending habits to auto-save an appropriate amount.
It takes up to five minutes to enter your phone number and link your checking account.
Create a Savings Goal
The final signup process step is creating your first savings goal. A “rainy day fund” is the default savings goal but you can change it.
Your other available goals include:
- Emergency savings
- Credit card debt
- Student loans
- Pricey splurge
If these goals don’t excite you, you can create your own custom goal. It’s possible to make multiple goals and Digit will transfer equal amounts of your savings into each goal. You can prioritize a goal to receive more funding too.
It'll take 2-3 days before the first transfer takes place as Digit analyzes your banking habits.
Digit doesn't publish the algorithm they use to determine the transfers but the amounts are relatively small.
The interface is simple and you can do everything via text message, with regular messaging rates. There's a web interface too.
What's cool about Digit is that you can use it to get information from your checking account via text message. I linked it up to my Ally Bank checking account and I can get recent transactions or see the balance with one text message. No more logging into an app, send “recent” to the Digit number and I get the three recent transactions. Simple.
Saving money with Digit is relatively effortless after joining. Digit analyzes your recent transactions and recurring bills to make small withdrawals between $1 and $50 for most people. The exact withdrawal amount depends on your personal habits and running checking account balance.
You can schedule manual transfers as well if you have extra money to save.
It’s also possible to temporarily suspend auto-saving when your finances are tight. You can tell Digit how many days to pause transfers.
Digit recommends using a debit card or schedule bank withdrawals to accurately track your daily spending habits.
You can use credit cards for spending too but Digit doesn’t monitor your credit card purchases. The one-time monthly statement payments may skew Digit’s savings algorithm or you may have to temporarily pause withdrawals.
No Overdraft Guarantee
On the off chance that you have a surprise bill that drains your checking account, Digit reimburses up to two overdraft fees due to Digit’s auto-saving.
You can submit an online form to request your overdraft fee reimbursement.
Digit has an iOS and Android app, so you can use the app to withdraw your funds easily.
Alternatively, you can text ‘withdraw' to the Digit number. They'll ask you for the amount and even let you enter a reason, which will be added as a note. I put in a withdrawal request and it was transferred in a day.
Instant transfers that arrive within minutes cost $0.99 each. Otherwise, it’s free to withdraw your Digit funds. Most withdrawals arrive in your bank account the next business day when you request your funds by 4 pm Pacific Standard Time.
There are several savings and account protection features that add extra value.
Digit is not a bank so they don't offer an interest rate on your savings. Keep in mind that your Digit funds are at various FDIC-insured banks for safekeeping. Instead, you earn a “savings bonus” on your account balance. You receive this bonus quarterly.
Today, that savings bonus is 0.1% – not as good as the best online savings accounts but better than a typical checking account.
Being able to create multiple savings goals makes it easier to save for future purchases. You can prioritize your “one money goal” to reach your target amount sooner.
Digit automatically decides how much cash to deposit into each goal.
Safe Saving Level
You can enable Digit to only withdraw when your checking account is above a specific balance.
For example, you might set your Safe Saving Level at $300. Digit only makes withdrawals when your account balance is greater than $300.
Max Daily Save
While you can’t determine how much Digit will withdraw each time, you can set daily transfer limits. You might use this feature if you feel that Digit is auto-saving too much at a time.
Digit offers two different overdraft protection benefits. The first perk is “overdraft prevention” that automatically transfers funds from Digit rainy day fund if your bank account balance drops below a certain amount that you designate.
Here is a quick example. If your prevention preset is $100, and your checking balance goes to $90, Digit transfers $10 back to your checking account.
Credit Card Debt Reduction
Another nifty Digit feature is sending automatic payments to your credit card. The credit card debt reduction tool lets Digit send monthly transfers directly to your linked card when you choose the credit card savings goal.
You will still need to pay your monthly statement yourself. But if you have credit card debt, these small monthly contributions can pay off your balance sooner.
Student Loan Debt Reduction
Choosing the student loan goal lets Digit link to your student loan servicer to send extra payments.
You can invest your cash with a traditional IRA or Roth IRA using Digit as well. Digit invests using cost-efficient index funds. This can be a worthy alternative to a robo-advisor if you want to invest and save money using the same app.
The first 30 days of using Digit are free and then you pay $5 per month. The only other potential fee you might pay is 99 cents for instant withdrawals to your linked checking account.
This monthly fee is a nuisance but few great apps are truly free.
Digit reports that the average user saves $2,200 (on top of other savings) in their first year, which is tremendous, and that's definitely worth the fee.
Is Digit Safe?
Digit uses bank-level security to protect your information. Your linked bank account information isn’t kept on Digit’s platform. No app is foolproof but Digit uses industry-leading security measures to protect your data and privacy.
Pros and Cons
- Automatically saves money several times per week
- Can save for multiple money goals
- Instant and next-day withdrawals to your linked bank account
- Can send extra payments directly to credit cards and student loans
- Retirement accounts are available
- Reimburses two overdraft fees
- Costs $5 per month (the first 30 days are free)
- Withdrawals amounts are somewhat unpredictable
- Savings Bonus interest rate is less than the monthly fee
- Can only link one checking account to Digit
Who Should Use Digit?
Digit is a good way to save money if you have expensive habits or don’t take the time to set aside your spare cash.
As this app costs $5 per month, Digit is worth it when your monthly savings are greater than the monthly fee. Having a high savings rate is likely if you don’t pause the auto-saving feature.
Alternatives to Digit
Digit is a great way to save money, but you may appreciate other automatic savings apps that have lower fees or use different savings strategies.
Acorns is a popular micro-investing app that invests your spare change by rounding up your debit card or credit card purchases. Your monthly plan costs either $1, $3 or $5.
The $3 plan lets you open taxable and retirement investment accounts. You can also open an Acorns Spend checking account that includes a debit card for up to 10% bonus investments on select purchases and you have access to over 55,000 fee-free ATMs.
Chime offers free online spending and savings accounts. You can schedule automatic transfers into your savings account. There’s also free overdraft protection and access to fee-free ATMs with a spending account.
Varo can be a good fit if you’re comfortable setting aside money yourself. You can earn an exciting interest rate that’s higher than many local or online banks. It’s also possible to get fee-free Allpoint ATM access and overdraft protection.
Digit is an effective app to save small amounts of money each week. You will need to save more to afford retirement and major life events. However, Digit makes it easy to find money for extra debt payments or planning for future purchases.