Digit is a budgeting app that helps users automate their savings. That means it calculates how much money you need to save and automatically transfers it from your checking account to a separate savings account.
Now, I’m a bit skeptical about financial automation tools. When it comes to managing my money, I’d much rather roll up my sleeves and get to work than take the easy way out.
But not all of us are natural-born savers. Some folks need some extra help getting started. If this sounds like you, Digit may be a great solution.
In this Digit review, we’ll explore how the personal finance app works. We’ll also assess the pros and cons and talk about some of its top competitors to help you determine whether the Digit app is right for you.
What Is The Digit App?
Digit is a personal finance app created in 2013. Its goal is to help users put money away for growth without having to think about it.
When you open up a Digit account, the app helps you set up a savings goal and then uses machine learning to analyze your spending habits.
Digit sets money aside in a separate savings account based on how much money you want to save and how much money you need for your regular expenses.
Let’s break down how Digit can help your personal finance with automated savings.
How Digit Works
Here’s how Digit works.
1. Analyzes Your Account
First, Digit connects with your linked checking account. Then Digit analyzes your inbound and outbound cash flows and looks for spending patterns.
That means Digit will leave plenty of funds in your checking account to cover your bills and necessary spending.
2. Determines the Right Savings Amount
Once Digit has a clear understanding of your financial situation, the app determines how much it can pull out of your account without you noticing.
Digit does this using an algorithm, machine learning, and behavioral psychology principles. Pretty cool, if you ask me!
Digit will also let you set up customized savings goals. These can include an emergency fund, a vacation fund, or money you want to put aside for retirement.
3. Moves Money Automatically
The last step involves transferring money into your Digit savings account, which the service does automatically by removing money from your account each day.
You can then go about your life with the peace of mind that comes with knowing you’re saving your cash without having to worry about it.
Digit uses a handful of partner banks — including Chase, Bank of America, and Wells Fargo — to hold its savings accounts. That means your account will be FDIC-insured up to $250,000.
Digit savings accounts offer a savings bonus of 0.10% annually, paid out on a quarterly basis. To be honest, you could easily find another online savings account that would pay you a higher annual percentage yield (APY).
Here are the best Digit features.
Digit encourages a “set it and forget it” approach. Simply download the app, set up a Digit savings account, and let the app handle the rest. By factoring in your upcoming bills and scheduled payments, the Digit app reduces the risk that you set aside too much in savings in one month.
Digit lets you withdraw money 24/7/365. What’s more, Digit doesn’t have a monthly restriction limiting how many times you can pull money from your account. That’s compared to most savings accounts, which are bound by the Federal Reserve’s Regulation D, which limits customers to six withdrawals or transfers per month.
Not so fast, though. Digit charges $0.99 for an instant withdrawal. But at least you won’t have to wait several days or weeks to get your cash like you would with other apps.
Overdraft Fee Protection
If you have a limited cash flow, you’re probably wondering about overdraft protection.
Digit offers an overdraft guarantee with a feature called Safe Saving that allows you to set a minimum balance in your account. If your account falls below this threshold, Digit won’t pull any money from your account.
For example, you may tell Digit not to remove money if your account balance reaches $100.
Digit works with more than 2,500 U.S. banks and credit unions, so chances are there will be no problem linking your checking account to a Digit account.
However, keep in mind that right now, Digit only works with U.S. banks. Unfortunately, international institutions will not work with this app.
Debt Reduction Service
Are you buried up to your eyeballs in credit card debt? Digit may be able to help.
Digit offers a credit card reduction plan for making automatic payments. To activate this feature, set a credit card debt reduction goal in the Digit app. Then Digit will allocate money every month toward your credit card payments.
If you take this approach, just make sure that the money makes a difference and puts a dent in your debt. Take my word for it: Putting credit card payments — or any payment — on auto-pay is risky.
As a side note, trying to save while you’re in debt is like spinning tires in the mud. You can’t move forward and make actual gains until you get control over high-interest debt.
Truth be told, problem debt is a top wealth killer. If you’re in debt, treat the situation like a financial emergency.
Digit Direct Checking Account
In June, Digit announced it will release a new checking account feature, which will most likely be available by the end of 2021.
Backed by FDIC-insured MetaBank, Direct will come with debit card access and function as a traditional online checking account. It will also link with Digit’s automatic savings and investing features.
Digit lets you set money aside and invest for retirement through an individual retirement account (IRA). Digit provides you with a diverse portfolio of exchange-traded funds (ETFs) instead of letting you pick individual stocks.
So, if you’re looking for more control over your investment account, you won’t find that through Digit. This is an automated investing service, which is also known as a robo-advisor. As such, it’s a low-risk way to put money aside for retirement growth.
Whatever you do, just don’t expect to get rich quickly with this type of strategy.
Pricing and Fees
Digit costs $5 per month, and you can cancel at any time. There is also a $0.99 fee for instant withdrawals.
A monthly fee of only $5 might seem cheap, but it adds up to $60 annually if you do the math. Seeing that today’s interest rates are so low, it’s tough to justify spending this much money when you could just move your funds for free.
Digit claims that the average member saves $2,220 per year. But with a bit of diligence and some effort, you can save that money yourself.
If you’re really strapped for time, you may be able to justify paying $5 per month for Digit. But I’m willing to bet you could find the time and pocket the cash that you would otherwise spend on an automated investing service.
Signing up for Digit takes practically no time at all. In fact, you can get up and running in a matter of minutes.
1. Sign up for Digit
To get started, head over to Digit.co and click on the blue “Sign Up” button. Enter your mobile number and a new password to get started.
Once that’s done, confirm the activation code that you receive on your mobile device. From there, simply enter your personal contact information and connect the bank account that you want to use to deposit funds.
Next, download the mobile app, which is available for both iPhone and Android devices.
The Digit app is user-friendly and easy to navigate, as you can see by its 4.7-star rating in the App Store and 4.6-star rating in the Google Play Store.
2. Start saving and investing
Once you’re in, Digit starts pulling money from your checking account on a daily basis.
The money goes directly into your Digit account. You can also put the money into a savings account or an emergency fund. Digit calls this a rainy day fund. Of course, you also have the option to invest in an IRA.
3. Track your progress
I can’t stress this enough: When using an automation service, you have to keep track of your progress. This is especially important with a service like Digit, which skims money from your accounts. Over time, the money will pile up, and you need to keep tabs on it.
To be successful with Digit, you have to allocate money strategically into higher-yielding accounts. Keep a close watch and be smart about how you move your cash. The last thing you want is for it to get stuck in a low-performing account.
Here are the top promotions for 2023:
- 30-Day Free Trial: Digit currently offers a 30-day free trial. If you don’t like the service after signing up, you can cancel within that window and avoid paying the $5 monthly fee.
- Referral Program: Have some friends or family members who can benefit from Digit? Get them to sign up and get paid by Digit. The company will give you $5 for every new customer that you bring onto their platform. As an added bonus, your buddy also earns $5 for signing up.
- Savings Bonuses: Save with Digit for three consecutive months, and your account gets a 0.10 percent annualized savings bonus. Digit automatically deposits the bonus into your account. So there’s no need to manually cash out and claim a reward. Bonuses don’t expire, either. Note: The 0.10 percent bonus applies to the average daily balance in your account over a three-month period.
Digit customers benefit from FDIC protection, meaning all accounts have up to $250,000 of insurance on deposits.
As for security, the company uses advanced security measures, including 256-bit encryption, multi-factor authentication, and Touch and Face ID for iOS.
Consider yourself technically savvy. Look into Digit’s Bug Bounty Program, which pays people money for reporting security vulnerabilities.
Unfortunately, Digit doesn’t have a phone number. So if you need to contact the company for support, you’ll have to use its Help Center to send a help request.
As you can see, Digit provides a drop-down menu with a list of topics. You can enter your contact information, and explain your challenge, and the company will get back to you.
Additionally, Digit offers a useful in-app chatbot. You can ask the bot questions and issue commands like “withdraw,” “refer,” and “save.”
Pros & Cons
Here are the pros and cons of using Digit:
- Easy to use
- Overdraft protection
- 0.10 percent bonus
- Easy withdrawal option
- Automatic transfers
- No interest
- $5 monthly fee
- Limited customer support with no phone number listed
Alternatives to Digit
Digit is far from being the only automatic savings app. Here’s a look at some of its top competitors.
Acorns is an all-in-one micro-savings app for checking, retirement, and investment accounts.
The app automatically pulls money from your bank account each paycheck. You can invest directly within the app and adjust your portfolio as you need to.
Acorns does’t have any hidden fees and provide access to more than 55,000 fee-free ATMs.
Price: $3 per month
Easily save & invest in the background of life. Invest your spare change, save for retirement, spend smarter, earn more, and grow your knowledge.
Qapital is an up-and-coming app for automating investing and savings.
You can set financial goals and automate savings transfers from your bank to the app. The company then lets you take the difference from a transaction and transfer the money to savings.
For example, if you buy an everything bagel for $3.65, you can set the app to round up to $4.00 and put the extra $0.35 away in savings or investments.
Qapital is now offering a free 30-day trial, after which subscriptions will cost $3, $6, or $12 per month.
Chime is an online banking app with an automated savings component.
When you make a transaction, the app rounds up the transaction to the nearest dollar and places the money into a savings account.
The account also comes with no fees on overdrafts (under $200), early direct deposit access, and up to $500 in annual rewards.
Chime offers no hassle online banking with a quick and easy to use app that allows you to manage all or your accounts in one place, and best of all, there are no fees to worry about.
Frequently Asked Questions
Here are the most frequently asked questions about Digit.
Does Digit really work?
It depends on a few factors. If you’re bringing in a steady income, Digit can help protect your earnings and make sure that you put money away for growth.
At the same time, Digit can limit you in some ways. While Digit can be helpful for beginner investors, advanced investors may be able to outperform the app’s automated service.
Use Digit if you’re short on time and need some motivation to start saving money or investing. If you’re already well underway on your savings journey, then the app is probably not worth it.
Can you make instant withdrawals from the Digit app?
You can make instant withdrawals from Digit. However, the company charges $0.99 to transfer money instantly. You can withdraw $5,000 per transfer.
Does Digit offer a debit card?
Digit doesn’t offer a debit card yet. But that will change later this year when Digit Direct becomes available. For the time being, you have to transfer your money into a bank account if you want to access it.
Does Digit work with credit cards?
Digit can link with credit cards to make automatic payments, potentially reducing your debt over time.
Can Digit help with budgeting?
Digit isn’t strictly a budgeting app. However, it can help save money, which is a core aspect of budgeting.
It’s best to use Digit in conjunction with other budgeting apps. This should be a complementary service to an app like Personal Capital.
The Bottom Line
The Digit app can help you get closer to your savings goals. It can also help you start investing.
My biggest concern is that Digit might make you lazy. As a disclaimer, it’s best to use apps like Digit sparingly instead of replacing manual money management.
To paraphrase Benjamin Franklin, laziness can creep up on you and make you poor. If you ask me, it’s better to do the hard work and be hyper-vigilant with your personal finances.
No matter how you look at it, the trick is to strike a balance.
Use tools like Digit if you need some encouragement to save and invest. But don’t take your eye off the ball. Only you can push yourself across the finish line to financial independence. But I’ll be rooting for you the entire way.