Planning for how to save money can be tricky when you’re trying to keep up with everyday expenses. And if you don’t yet have a savings account or an emergency fund, you’re not alone. According to a recent report from the Federal Reserve, 27% of Americans said they couldn’t cover a $400 emergency expense without borrowing money or selling something, and 12% said that they wouldn’t be able to pay for it at all. Learning how to manage your money can be a struggle.
Whether you’re trying to prepare yourself for sudden costs, put money away for retirement, or reach a fun financial goal such as taking a vacation, putting money aside is key to staying in control of your personal finances. But changes in monthly income and expenses can make it difficult to know how much to safely set aside in a bank account. Enter Digit: the savings app that helps you save the right amount of money each day while you go about your business. Digit calculates your income, upcoming bills, and expected expenses to determine exactly how much to withdraw from your checking account, saving you time as well as money.
What is Digit?
Founded in 2013 by Ethan Bloch, San Francisco-based Digit is a finance app that helps people effortlessly save money without cutting into their expenses. It’s a legitimate way to save money in an FDIC-insured account without having to keep track of a monthly transfer amount or worry about overdraft fees.
Because Digit analyzes your spending habits to decide how much to save for you, it saves you time and energy and helps you avoid mistakes. It’s also completely secure, with military-level 256-bit encryption.
How does Digit work?
Digit checks your spending and upcoming bills against the money you make and then moves money from your checking account to your Digit account each day if you can afford it. To determine how much to save for you, Digit looks at the following four factors::
- Your checking account balance
- Your upcoming bills
- Your upcoming income
- Your recent spending
Based on these figures, Digit calculates a safe amount of money that you won’t need and won’t notice being gone and deposits that amount into your Digit account. You won’t need a savings account, and funds in your account up to $250,000 will be FDIC-insured.
Unlike automatic transfers at a regular bank, Digit will adapt your automated savings to your spending habits and bills. You won’t need to pick an amount to transfer, you don’t need to worry about a minimum balance, and you can withdraw from your Digit account anytime you want without restrictions.
Digit also lets you set automatic savings goals, and shows you how far you’ve come towards achieving your goals. There’s no limit to the number of goals you can set. You might set a rainy day fund goal, a student loan debt goal, and a wedding fund goal, and Digit will help you save towards all of those objectives. The app can also help you pay off unwanted credit card debt by making automatic payments with your savings.
How much can you save with Digit?
There are no limits to how much you can save with Digit, and your account is FDIC-insured up to $250,000. The average Digit customer saves $2,200 per year. Digit users have collectively saved more than $1 billion securely.
The more you budget and the less you spend, the more you save. Digit will even reward you with a 0.1% annualized savings bonus after you save money for three consecutive months. You don't need to meet an account minimum to get the bonus.
Maximizing your savings with Digit
Since the amount you save is partially determined by your recent spending, it’s important to develop healthy spending habits. To maximize your savings, you should:
- Create a budget for your monthly expenses and stick to it.
- Cut any unnecessary expenses. An app like Trim can help you identify areas where you could save, and will even cancel unwanted subscriptions for you.
- Use apps to save money while you shop, so Digit will be able to move more money from your checking account towards your savings goals.
- Generate more income by finding legitimate ways to make a little extra money on the side.
- Earn passive income with a side hustle that requires very little ongoing effort.
Common questions about Digit
Does Digit cost money?
You’ll get a 30-day free trial, but Digit costs $5 per month after that. That monthly fee may seem like a lot to pay when you’re trying to save money, but Digit provides many benefits, including saving users an average of two overdraft fees per year by providing overdraft protection. When you consider that the average overdraft fee is $33.36, Digit pays for itself.
Is Digit secure?
Yes. In addition to providing 256-bit encryption, Digit uses firewalls and other precautions to protect your data. iOS users can even set a passcode and require Touch or Face ID.
Is Digit FDIC-insured?
Yes. Your Digit balance is held at FDIC-insured banks and is insured up to $250,000.
Is there a fee to withdraw from Digit?
No. It’s free to withdraw from your Digit account, and you can withdraw as many times as you want. It typically takes about one business day for withdrawn funds to appear in your checking account.
Is Digit better than Qapital?
That depends on your needs. While Digit is focused on tracking your spending patterns and determining how much to save for you each day, Qapital is more focused on helping you decide how much you should spend based on your savings goals. Qapital also has some additional features, like pre-built investment portfolios. Members with the basic plan pay $3 per month and save an average of $1,500 per year.
Does Digit work with my bank or credit union?
According to the Digit website, Digit works with thousands of banks and credit unions, with more being added constantly. If your bank isn't listed when you're connecting your checking account to your Digit savings account, reach out to Digit support for further assistance.
How to sign up for Digit
To start your free trial of Digit, you’ll need to create an account. First, head to Digit.co, click Sign Up Now, and enter your mobile phone number and a password.
You’ll need to link your checking account, so you have your account and routing numbers handy before getting started. You’ll also need to confirm your account via text message, after which you can use texts to give Digit commands rather than logging in online.
And if you prefer to use Digit on your phone, the Digit app is available to download for Android and iPhone.
More ways to grow your savings
If Digit doesn’t seem like the right fit for you, there are other ways you can both save and earn money. If you don’t need the support of Digit’s analysis and can afford to make a recurring monthly deposit, you might be better served by a high-yield savings account that offers a better-than-average interest rate.
If you like the automated savings features of Digit but would prefer to be investing your money, consider Acorns. By comparing Digit vs. Acorns, you can see which better suits your financial goals. And remember, unlike savings, investments are inherently risky so there is no guarantee you will earn a return on money invested and you may incur losses on your principal.
There are also a number of gigs you can pick up that will help you reach your savings goals. For example, if you’re saving for updates to your home, you could earn money by renting out a spare room on Airbnb. Or, if you enjoy spending time online, you could answer surveys in exchange for extra cash.
The options are endless when it comes to securing additional income and finding ways to save more of what you earn, so choose a combination of tools that works for you. And don’t get discouraged if you’re unable to save one month due to your expenses. Just do your best to get back on track the following month, and you’ll reach your goal in no time!