The Digit app has a goal: it wants to help you save money without ever needing to think about it. Not a bad goal, right?
Digit is one of a number of financial apps that are automating different aspects of a user’s financial life. There are micro-investing apps, Robo-advisors, apps that negotiate your bills for you, and micro-savings apps like Digit.
In this Digit review, you’ll learn how Digit’s powerful algorithm works to save money for you on a daily basis. And there’s more, like goal setting, a credit card and student loan repayment help, and Digit’s chatbot that is kind of like having your very own personal assistant.
Digit Review 2020: Is this savings app worth your time?
What is Digit?
Digit is a micro-savings app that was founded in 2015 by then 29-year-old Ethan Bloch, and users have already saved over $1 billion. The way Digit helps its users save is by using an algorithm to find the “perfect amount every day” to pull from your checking account and put it into savings.
The Digit app is meant for people who need help saving money. Maybe you’ve never created the habit or because you think you don’t have enough.
Now, some people legitimately aren’t earning enough to save… why I love side hustles… but there are a lot who have the money but don’t prioritize it for savings. That’s the point of Digit – by saving small amounts of money for you every day, you realize that you’ve been able to save all along. The hope is then that you make a bigger habit to save even more.
How the Digit app works
After you sign up for your Digit account, you start by linking a checking account (Digit supports over 7,000 banks). Then, this is when Digit’s algorithm comes in to analyze your spending to see how much you can save.
Digit’s algorithm analyzes four things:
- Checking account balance
- Upcoming income, including paycheck and/or predicted irregular income
- Upcoming bills
- Recent spending
That information is analyzed every day, and if Digit can safely pull money from your linked checking account, the app does. Digit skims funds off the top without you even noticing.
The money pulled from your checking account goes into your Digit account, or Rainy Day Fund. There’s no minimum balance for this account, and you can withdraw from it whenever you want.
What about overdraft fees?
This was one of the first questions I had after learning about Digit, so this is the first feature I want to address in my Digit review… If the app moves money out of your checking account without you knowing about it, how do they prevent overdraft charges?
Digit offers something called the Overdraft Prevention feature which allows you to set a minimum balance you want to keep in your checking account. You can pick any amount you want, and Digit won’t withdraw funds if that means your balance will go below that amount. You can turn Overdraft Prevention on or off in the app.
But if that doesn’t work, Digit offers Overdraft Reimbursement if they save too much and you are charged an overdraft fee for that transaction.
One more way you’re protected is that if your account dips below the minimum balance you want in your checking account, Digit will deposit money from your Rainy Day Fund back into your checking account.
Setting savings goals with Digit
You can use Digit to save for multiple goals at a time. You can save for travel, downpayment, concert tickets, emergency fund, holiday spending, etc. Digit says that most users are saving for three goals at a time.
You name your goal and can give it a description and target date if you want. You can edit, delete, transfer funds out of your account, and add funds with one-time deposits from your bank account.
If you have multiple goals, Digit will split the money it pulls from your checking account and divides it equally among your goals. Or, you can boost a goal to have more funds allocated for it.
Here’s how that works:
- Without a boosted goal: You have three goals and Digit saves $6 for you today. Each goal gets $2.
- With a boosted goal: Same three goals and same $6, but your boosted goal gets $4 and the other goals get $1.
Automated credit card and student loan payments
To help you get out of debt, you can use Digit’s savings goals to make extra or supplemental payments on your credit cards or student loans. Here’s how this works:
- Set credit card debt and/or student loans as one of your goals
- Connect your credit card and/or student loan servicer account to Digit
- Let Digit save for you throughout the month (you can boost these goals if you want)
- Once a month, Digit will send the balance of your debt pay off goals to the payee
Remember, these are extra payments. This is not meant to replace the monthly payment you’re responsible for making. You are using Digit to speed up your pay off.
Want even more advice on paying off debt? Learn the difference between two of the most popular ways to destroy your debt in Snowball vs. Avalanche: Which Debt Payoff Strategy is Best?
How much does Digit cost?
Digit recently went up in price, from $2.99/month to $5/month. After a 30-day free trial, you’re billed monthly from your linked checking account. However, if you signed up before July 23, 2019, you will still pay $2.99/month.
How does the cost of Digit compare to other savings apps?
- Micro-investing app Acorns offers three different account types, from a personal investment account, IRA, and checking account. Plans are $1, $2, and $3 per month.
- Twine is free to use if you’re saving in cash or an annual fee of 0.25% that is charged monthly.
- Qapital basic is $3/month or $6/month for Complete, which includes a personal investment account.
None of those apps are doing exactly what Digit does, but there’s a clear price difference.
Interested in micro-investing? Find which app fits your style at Acorns vs. Stash: Which is Better, How Much They Cost, and Should You Use Them?
Where Digit shines
With the Digit Chatbot, you can turn the app into a financial personal assistant that you text commands to trigger actions. Here are some examples:
- “Pause” will temporarily turn off withdrawals from your checking account to your Digit savings account.
- “Save” tells Digit that you want to move money into your Digit account, and the chatbot will then ask you how much to move over.
- “Today” will show you what your daily savings activity is.
- “W” or “withdraw” tells Digit you want to withdraw money from your account. You can also add the amount in your command, like “withdraw 20” tells Digit that you want to move $20 from your Digit account to your checking account.
You can see the full list of commands here.
Able to save with Digit for three consecutive months, Digit rewards you with a 0.1% annualized Savings Bonus. There’s no minimum account balance to receive the bonus. The bonus is prorated and based on the average daily balance of your Digit account.
If you like the Digit savings app enough to tell your friends about it, you can earn $5 every time you refer a friend. There are no limits to the number of referral bonuses you can earn, and the money is deposited into your Rainy Day Fund.
I’ve already brought this up in my Digit review, but I think it’s a great feature for an app that’s supposed to be helping you save money. Digit says that with its Overdraft Protection it’s “very unlikely” that you will see any overdraft charges in the first place. If so, you’ll be reimbursed.
Withdraw from your Digit account whenever you want
You can withdraw money from your Digit account any time you want and as many times as you need to. You can do that by texting the chatbot or going into the app and clicking on “withdraw.”
There are no additional fees or charges when you withdraw money from Digit.
Your funds are FDIC insured
The money in your Digit account is FDIC insured up to $250,000.
Digit uses military level, 256-bit encryption to protect your data.
Where Digit falls short
A fee for saving is a tough sell for some
With Digit’s recent price increase, this savings app is one of the most expensive apps I’ve reviewed. The other issue with the fee is that your money isn’t even being saved in a high-yield savings account.
On the other hand, Digit is offering something different – using an algorithm to save the “perfect amount every day” – and they claim that their average customers save $2,200 a year. If you’re still interested, there are some ways to offset that cost, like referrals and the Savings Bonus.
Digit’s customer service is run through the app or website, and it’s limited. Digit encourages you to find answers to your questions or issues in its Help Center, and if you don’t find what you need, you can fill out a contact form.
You can only use it for one checking account
I know a lot of people like me who have multiple bank accounts, and that doesn’t work with Digit.
Digit only supports one checking account at a time, and while you can add another user, they can only see what’s happening, not connect an account or make changes. Digit says they use this kind of closed-loop system for safety reasons.
It’s possible they’ll implement an option down the line, and if they do, I’ll keep you updated.
Digit review 2020 – The final word
The premise behind the Digit savings app is pretty cool: use technology to help you save money you didn’t know you had to save. I imagine this kind of model will spark a desire in some people to save even more by actively making it a priority… that’s the hope.
It’s so important because prioritizing your savings is how you’ll make long-term savings goals like retirement happen one day.
If the cost of Digit is something that makes you pause, that’s okay, it’s probably not for you. But, if you think that Digit can help you create a habit and start saving, it might be worth that $5. You can use it long enough to make the habit and then start saving on your own.