Creating a savings habit can be difficult. But, in this Digit review, you’ll see how this platform helps people consistently save money.
Not all people are good at saving money. Some are geniuses and consistent, but most of us, we sometimes find it hard — or maybe we are just being stubborn.
The majority of Americans are terrible savers, says a report online by CNN Money. In fact, the report, which was published in 2017, says that a quarter of people in the United States still have no savings at all.
Of course, there are various reasons for that — there’s not having enough money to save, no trust in banks, etc. But then again, if you think about it, having no savings is a scary place to be in because you never know what life will be throwing at you. You have to be prepared.
Meanwhile, an article published by The Wall Street Journal says that in 2018, saving was up by 17% from the previous year based on a report by the Commerce Department. This number beats consumer spending’s at 5.2% and business investment’s, which was at 7.8%.
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It’s probably safe to say that year after year, American saving habit changes — for the good.
With the pandemic that has happened in 2020, we wouldn’t be surprised if the numbers grow even more by the end of this year. You know, people learn from their mistakes.
But apart from what’s happening around, one of the many factors that must have helped change the way people save is the advent of digital banking.
Digital banking helps make things so much easier for savers and consumers in general. With just a click of a finger, you get to manage your finances. No hassles at all.
While there are lots of online banking platforms out there to choose from, today, we are obviously going to focus only on one — that’s Digit.
Digit is a company that might have revolutionized the way consumers save money by launching an app that helps you automate and separate your savings by connecting to your checking account and uses an algorithm to make automatic withdrawals every few days, and then deposits the money into a separate, but non-interest bearing savings account.
Sounds interesting?
Well, in the next few sections you are going to know more about Digit and how it makes saving ease.
In particular, we are going to tackle the following:
- What is Digit?
- Who is Digit best for?
- What does Digit have to offer?
- How does Digit work?
- How to get started with Digit?
- Are there fees involved?
- Is Digit safe?
- What are the upsides of Digit?
- What are the downsides of Digit?
WHAT IS DIGIT?
Digit is a micro-savings app that was established in 2015 by Ethan Bloch, who at that time was only 29 years old.
The Digit app makes saving money so much easier and uncomplicated by using a sophisticated algorithm to analyze the user’s money habits and save money for the user when he or she can afford it.
The app was created with people who need help saving money in mind. At the same time, those who want to save but want a simple tool to help them with.
Basically, Digit helps users automate and separate their savings by connecting to their respective checking account. As mentioned, the app uses an algorithm to make automatic withdrawals every few days and then deposits the money into a separate, but non-interest-bearing savings account.
Apart from savings, Digit also offers to invest as well as saving for retirement services.
Obviously, unlike typical online savings accounts, though, Digit does not make you rich by using the app. Also, since it is all digital, you won’t find a branch location like what traditional banks have.
Before moving on, get to know more about the Digit App in this very insightful and informative review by Money at 30:
WHO DIGIT IS BEST FOR?
Digit is an app that’s ideal for people who want to save money for specific financial goals. It’s actually a great app if you are saving for a short-term goal like a vacation, the furniture you want to buy, a birthday party, etc.
However, it also does offer to invest as well as saving for retirement services.
As mentioned in the previous section, it does not make you rich since it does not pay interest. So, unless you’re okay with that, then this app is for you.
Digit was created with people who are having hard time saving money in mind. If you want to save but find saving a difficult task to do, Digit should work for you. Digit automates and separates your savings by simply connecting it to your checking account, and then withdraws money from it and deposit it to your Digit account.
Basically, it does the job for you. Making your like so much easier and hassle-free. Needless to say, it does help you not miss saving a portion of your money for future use.
Digit is all-digital, which makes it appeal to the tech-savvy ones – especially the younger generations. It does not have a physical branch location like what traditional banks have.
WHAT DOES DIGIT HAVE TO OFFER?
Digit offers three different types of services namely: digit savings, investing, and saving for retirement.
Now, let’s get to know more about each service offered —
Digit Savings
Unlike a typical savings account, you don’t transfer or deposit money to your Digit account. All you have to do is link your bank account, and then Digit will take a look at your past expenses and income to be able to determine what your future expenses and income would be.
The app will then pull small amounts of money from your bank account and into your savings.
To be honest, how the app works are such a genius that it can be a little scary.
Anyway, in most cases, Digit pulls $5-$50 every two to three days. To avoid overdraft fees, Digit has products and tools in place to help you with that.
Although technically speaking, Digit is not an interest-bearing account, it does reward a 0.1% annualized Savings Bonus for accounts that have saved with the app for three consecutive months. The Savings Bonus is automatically deposited into the user’s Digit account.
All of the money that the app withdraws from the user’s bank is put into an FDIC-insured Digit bank account to ensure your money’s safety and security.
Digit Investing
Digit investing will help you invest strategically for the long term. So, if you are looking at saving for future use, this is definitely the option for you.
Basically, the app will look for safe amounts to invest every day to a fund that can grow over time.
Save for Retirement
We all need to save money for retirement, right?
With Digit, what it does is match you with the right tax-advantaged retirement account based on your income. The app will then save intelligently throughout the month along with your other financial goals.
Once every month, the app will invest your retirement savings into a diversified portfolio.
What’s nice about it is that it does not require account minimums or fixed deposits, which makes it appealing to anyone who wants to save for their retirement as early as now.
HOW DOES DIGIT WORK?
At this point of our Digit review, let’s talk about how it specifically actually works.
After creating an account with Digit, you start by linking a bank account. Currently, Digit supports over 7,000 banks. Make sure to check first if your bank is included in the list.
Moving on, once you are done linking your bank account to your Digit account, the app’s algorithm comes in to analyze your spending and income to be able to determine how much you can save.
The app’s algorithm analyzes four things, which include your:
- Checking account balance
- Upcoming bills
- Upcoming income (Including paycheck and/or predicted irregular income)
- Recent spending
The above-mentioned items are analyzed on a day-to-day basis, and if the app finds that it can safely pull money from your linked bank account, the app does without you even noticing it.
As mentioned in the previous section, the amount of money pulled from your bank account varies but usually amounts somewhere between $5 and $50. Digit pulls out money every two to three days.
The money from your checking account goes into your Digit account or your Rainy Day Fund.
Unlike a typical savings account, Digit does not have a minimum balance requirement. Also, it allows you to withdraw from your account anytime you want.
HOW TO GET STARTED WITH DIGIT?
To get started, head on to Digit.co and then, sign up.
To be able to create a Digit account, you will need to provide your phone number and then, enter a special code.
Please take note that Digit was designed to work primarily through text messages. Thus, the need to provide your phone number first.
After that, you will be asked to link your bank accounts to the app. You will then need to select your bank from the menu or via the Search bar. As mentioned, Digit supports over 7,000 banks.
You will then need to provide your bank login information, and then verify that it’s you by using a security code that will be sent to your phone number.
Once you’re signed up with Digit, you can now set and customize goals, as well as track your saving progress, withdraw funds, and a lot more.
ARE THERE FEES INVOLVED?
In this section of our review on Digit, we are going to talk about the fees.
By now, you are probably impressed already with how Digit works. Of course, it’s very legit to think about how much it will cost you if you get to enjoy the services provided by the app.
When you sign up for Digit, you are eligible for a 30-day free trial. Once the trial period is done, you will be charged $5 a month as a service fee.
While you may be wary about paying off a monthly fee and adding that up to your monthly budget, it may be worth the money still considering how much the tool could help you in saving money. Needless to say, it does all the work for you. All you need is to link an account and it does everything else.
Now, for those wondering about overdraft fees, Digit has an overdraft prevention feature, which allows the user to set a minimum balance you want to keep in your bank account. You can choose any amount you want, and the app won’t withdraw funds if that means your balance falls below the set amount.
Users may turn Overdraft Protection on or off in the Digit app.
In case the overdraft protection does not work and Digit saved too much, and then, you are being charged for an overdraft fee, Digit also offers Overdraft Reimbursement. This means Digit will return the fee charged to your account.
In addition, if your account falls below the minimum balance you want in your checking account, Digit will automatically deposit money from your Rainy Day Fund back into your checking account. All these happen without you having to do things manually.
IS DIGIT SAFE?
With everything that Digit does for you to help you save money, it is important to look into how safe your personal data and your money are with them.
Your account’s safety and security are one of Digit’s topmost priorities.
The app uses the latest security measures to ensure that all accounts are protected. Furthermore, all personal information provided is anonymized and encrypted.
With all these in place, users can relax knowing that Digit is doing its best to protect their accounts.
Similarly, your money is also safe with Digit. All deposits are secured because Digit is insured by the Federal Deposit Insurance Corporation (FDIC). All funds are insured for up to $250,000 in case of a failure.
In addition, Digit understands that linking your bank account to the app can be scary, but it ensures that all personal data and its users’ money are all protected.
WHAT ARE THE UPSIDES OF DIGIT?
To complete this Digit review, we are providing you with a list of pros and cons to help you gauge if this app is applicable to you.
Let’s begin with the pros. Some of the upsides of using Digit include:
- Automatic Savings – With a Digit account, you don’t have to worry about setting aside money for savings anymore. The app does it for you! All you have to do is link it to your bank account, and the app does all the work on your behalf.
- Saving Money without Thinking – Once your Digit account is set up, you can just relax as the app does everything else for you. The next thing you know, you already have saved money for your dream vacation or an item you’ve been wanting to buy for a long time now.
- Savings Bonus – Although Digit does not pay interest, it does provide a savings bonus of 0.1% annually. The Savings Bonus is automatically deposited into the user’s Digit account.
- $5 Referral per Signup – Digit gives away $5 for every friend you refer to the app.
- All-Digital – Digit is an all-digital micro-savings platform, which makes it easier to track and manage your account.
- Safe and Secured App – Security is one of Digit’s top priorities, thus, the app ensures all security and safety measures are in place to keep your personal information protected.
- FDIC-Insured – All deposits on Digit are FDIC-insured, which means in case of an unfortunate event, all accounts will receive up to $250,000 per depositor.
WHAT ARE THE DOWNSIDES OF DIGIT?
Moving on, in this section, we are going to share with you some of the downsides of Digit, and this includes the following:
- $5 Monthly Fee – Unfortunately, there is a price to pay for all the work that Digit does for you, and it amounts to $5 monthly. Although it may be an addition to your budget, it may be worth it in the end given all the work that the app does for you.
- Cannot Perform Transactions via the Website – Digit’s website does not support making transactions like deposits or withdrawals. You need the app to do these things instead.
- Low to No Interest – Compared to a typical savings account, Digit does have low to no interest at all, which makes it not ideal if you want to save and earn from your money at the same time.
- Unexplained Savings Algorithm – It can be quite scary how exactly the app gets to determine how much money is transferred from your bank account to your Digit account. To be honest, it’s kind of bothering and scary at the same time. Nonetheless, it does the job well.
- One Checking Account at a Time – Digit only works with one checking account at a time. So, if you have multiple accounts, this may not be work for you.
FINAL THOUGHTS ON DIGIT
Digit is a trendsetter. It probably is one of the best solutions to make saving money so much easier.
It basically does all the job. All you need is to link an account, and then, you can sit back and relax.
However, to be brutally honest, if we were to weigh things up, we thought while Digit may one of the best automatic savings apps out there, there may still be better choices to choose from. Do you agree?