[Update: Digit is no longer free. They are charging $2.99 a month and as a result, I don’t recommend it to the majority of my readers. I still encourage you to read this post so you can learn what Digit is all about as there are some similar options that are free. One of the best is Qapital.]
Do you have a hard time saving money? Of course you do! We all do! But I have found what I feel is the Holy Grail to saving money. I realize this is going to sound like a late-night infomercial pitch to you, but really, there are no strings attached and it really is as good as it sounds. And yes, it is free. It is called Digit.
What The Heck is Digit?
Digit is a platform that is designed to help you save money. Here are the guts to how it works. You create a free account with Digit and link your checking account. Digit then uses its algorithms to crunch your income and spending each month and determines how much and how often it can save you money.
Once it has this info, it will randomly make transfers from your checking account to a savings account. These transfers will vary in amount, but are usually around $5 or so and occur every few days.
How Does This Help Me Save Money?
As I mentioned at the start of this post, most of us are horrible at saving money. In fact, most of us save nothing each month. If we save nothing, how the heck will we ever improve our finances? (And don’t answer with winning the lottery. Or robbing a bank.)
Now, many of us know we should be saving some money, but we never get around to it. This is where Digit comes in. It saves for you. You never have to think about it or do anything after you sign up and link your account. And that process takes a whopping 3 minutes at most.
So, you can be a lazy bum and do nothing to improve your financial picture other than signing up for Digit and you will be making progress. (Of course, you should be doing other things but that is for another post.)
What’s The Catch?
I know, you are skeptical. I was too. After all, all of these get rich quick scams never pan out, and things “too good to be true” usually are just that. But Digit is different.
I signed up for it almost a year ago. They have been transferring money from my checking account every couple of weeks and I only notice it when I look at my transactions online. They transfer little amounts so that you never even notice the money gone from your account.
But I am certain you still have questions. I tried my best to anticipate them so here there are with some answers:
How much does Digit cost? The service costs $2.99 a month to use.
What savings account is my money transferred to? You don’t need to have a savings account to use Digit, just a checking account. They will transfer money from your checking account to a savings account with Digit.
Is it safe? Yes. They take security seriously and use the same 256-bit encryption that major banks use to protect your personal information.
Am I protected? Yes. Any money you have with Digit is covered by FDIC Insurance, which is currently $250,000.
What are the restrictions? There are two. First, you have to be in the US to use Digit. Second, because it is new, it doesn’t work with every bank out there. Most big banks are covered but if you have a small community bank or a credit union, you might not be able to use Digit yet. I say yet because they are always adding new banks to the system.
What happens if Digit takes too much money? They guarantee they will not overdraft your checking account. In the rare event they do, they will cover the fees for doing so. (As a user for close to a year, I never came close to them overdrafting my account. But there are additional safeguards you can use. More on that below.)
How do I get the money in my savings account? You can request the money in your savings account any time, any day. Digit will electronically transfer it back to your linked checking account within one business day and without a fee.
Do I earn any interest on my savings? At this time you don’t earn any interest. But you do earn a savings bonus. The bonus you earn is based on your average Digit balance over the past 3 months.
So walk me through an interaction with Digit. You can sign up through this link here. You follow the prompts to link your checking account – again this takes like 3 minutes. Once you are linked, you are done.
Digit will send you text messages telling you when it saved you some money, what your checking account balance is, etc. In fact, you mainly text with Digit when you want things, though they have just introduced an app for you to use as well. Below are the current commands you can text:
- Savings: you see the amount you’ve saved so far
- Checking: to see your checking balance
- Withdraw: to transfer your money back to your checking account
- Balance: to see the balance of your checking account
- Pause: to stop the transfer of money at any time
- Unpause/Resume: to restart the transferring of money
- Bills: to see any bills that are coming due that you have to pay (not to Digit, but your everyday bills)
- Settings: to change settings
- Recent: for recent transactions
- More: to see more recent transactions
- Save: to manually transfer money
- Save More/Save Less: use this to save more or less in a given day (can be used up to 3 times per day)
- Minimum: allows you to set a minimum account balance. For example, if you tell Digit your minimum balance is $500 in your checking account, Digit will stop transferring money when your balance is below $500.
- Commands: get a list of common commands
- Settings: adjusts the frequency of balance updates
- Timezone: choose your timezone
- Refer: your referral code to earn money from Digit when friends sign up
- VCard: contact card for your phone’s address book
- Nickname: change the name Digit calls you
For example, if you want to transfer money from your Digit savings account to your checking account, you simply text “Withdraw”. Digit will tell you what your savings balance is and ask you how much your want to transfer back. Enter the amount and you are done.
One other example, I have Digit call me Mr. Millionaire. It feels good when the text comes through and motivates me to keep saving.
They are adding new commands all of the time. You can see the full list of commands here.
Digit is a great idea. When it first came out, I was one of their biggest supporters. Being able to save automatically for free was a great way to help people who don’t save to start. Even saving little amount like you would with Digit added up over time. In the time I used Digit, I saved a total of $826.15. Not too bad.
But now they charge a monthly fee and I can no longer stand behind the product. this is because most people that I help to save with the app are saving $10-$15 a month. Taking $3 of that every month is crazy. I would rather see you log into your bank account and set up an automatic transfer to your savings account for $15 and have it save every month going forward. When you do this, you pay nothing.
With that said, if you think Digit will save you a few hundred dollars a month, then a $3 monthly fee isn’t an issue. But for everyone else, there are better options that are free. In this regard, I suggest you look into Qapital. It’s a great service that is free and works just like Digit.
[Photo Credit: Leila]
Hi, my name is Jon and I run Compounding Pennies. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.