Digit Review: “You Won’t Even Notice” Automated Savings Account

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Want to save more, but don’t want to actually think about it? Digit is a fintech start-up that combines a free FDIC-insured savings account that want you to give it permission to tuck some of your own money away for you. There’s mindless eating, mindless spending, and now mindless saving.

How does it work? Instead of rounding up your card purchases or getting you to commit a regular savings schedule, Digit is like a helicopter parent sneaking into your wallet/purse and taking out money when it thinks you won’t notice. Okay, so it’s more about an algorithm that tracks your income and spending patterns… and then takes out money when it thinks you won’t notice. It keeps on depositing that money into a savings account until hopefully one day you have something substantial Here’s a nicely-illustrated video about it:

SMS Text-based interface. After you link up an existing checking account, ongoing interactions with Digit can be done almost completely by text message. If you prefer apps, Digit now has an iOS app that offers a little bit of extra polish to your normal text message program. I thought it might be redundant, but I actually prefer using the app now. A few screenshots:

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Free. Digit does not charge any fees directly. They make money by keeping any interest that might be earned on your savings balance. Given that the top savings accounts pay roughly 1% APY, that means for every $100 in the account you’re losing out on $1 a year. (Technically less, given the new Savings Bonus outlined below.) They also promise not to sell your transaction data.

New features: Minimum balance protection, Savings Bonus. I actually started using Digit a few months ago, but turned it off when I found out they didn’t (at the time) have a minimum balance protection feature. For example, you might have a bank account that requires a $1,000 minimum daily balance to avoid a $10 monthly fee. Digit used to have no way of knowing that, although they did promise to refund any overdraft fees. Now, you can set a minimum value that Digit will not allow your account to go below.

Digit also offers a “Savings Bonus” now:

Every 3 months you will receive a Savings Bonus from Digit. The Savings Bonus is based on your average balance over the previous 3 month savings period. For every $100 you keep in Digit for 3 months you will earn a 5 cent Savings Bonus.

The math roughly works out to 0.20% APY interest rate. Not exactly awe-inspiring, but I suppose it is something. I’d still rather just withdraw my money once the balance got big enough.

My personal experience. Every few days, random amount like $5.22 or $11.35 would be debited from my checking account. Honestly, for some who likes to be in control, having all those extra entries on my bank statements got to be a bit annoying. After a couple months though, I had over $300 saved up. Was this amount more than I would have saved anyway? Would I be better off with a formal budget? It’s hard to say. I can imagine some people really liking the feeling of “found money”, though.

Recap. Digit offers mindless saving, which is definitely a unique proposition. As it is free, I would place it under the “Try It Out” category, as long as you are okay with giving a start-up app access to your main checking account. You might like giving someone else the steering wheel. You might not. I’m still on the fence myself. If previously-reviewed Qapital was “set-your-own-rules”, Digit is more “leave-it-up-to-the-robots”. You could even use both apps at the same time.

Comments

  1. When I originally heard about this I assumed they sold your transaction info without bothering to find out. It’s good to hear that they don’t and hopefully they don’t surrepticiously change their privacy policy in the future.

    I might just try this (or Qapital) out now because I always end up saving money on purchases but don’t have the desire to go through the process of an ACH transfer or budget adjustment to reclaim that savings. This might give my savings rate an additional boost.

  2. Fred Mertz says:

    The privacy policy very clearly states that they will share your information with third parties.

    “We may use Personal Information for the purposes described elsewhere in this Privacy Policy and internally for our general commercial purposes, including, among other things, to offer our products and services and products and services of third parties that we think you might find of interest, but only Digit and our third-party service providers involved in distributing the offers or providing the products or services will have access to your Personal Information. Our third-party service providers will only be permitted to use Personal Information for that intended purpose.”

    • I read that three times and still don’t understand what it says. I think it says that they use your info internally to market stuff to you, and that they may use a third-party tool in that regard. I do wish it was less legal-ese.

      Their FAQ makes a much more clear claim:

      “Does Digit sell my information to third parties?

      No, Digit does not sell any of your information to third parties.”

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