Automating Your Savings Just Got Easier With Digit

automated savings with digit[UPDATE: Digit is no longer free. They are now charging a monthly fee of $2.99. As a result, I no longer recommend the service. If your budget is tight, having Digit save your $5-$10 a month isn’t worth the cost. In this case, I recommend you look into Qapital. It’s a little different in that it rounds up purchases, but it is completely free. You can check it out here.

If you have a large excess of money in your checking account, then Digit can still be an option for you and you can read my complete review below. Thanks.]

A few months ago, I posted on the simplest way ever to become rich. While I think you should really read that post, I’ll give you a CliffsNotes version. (Do they even make CliffsNotes any more? Do kids still use them?) Anyways, the way you become rich is to automate your savings. Since most people save what is left over at the end of the month, they end up savings a whopping NOTHING each month. It doesn’t take an advanced math degree to know that your nest egg will never grow if you never put anything into it.

The Typical Automation Route

Up until just recently, there were a couple of ways to automate saving money:

  • Invest in your 401k plan at work. Since the contributions come out before you get your paycheck, you are guaranteed to save.
  • Set up a recurring transfer from your checking account to your saving account.
  • Set up a recurring transfer from your bank account to a mutual fund account.

That’s it. While most can handle the 401k plan option, few set up a recurring transfer from their checking account to their savings account. Why? I have no idea. Maybe they get paid at different times each month, so it is hard to decide when to make the transfer? Maybe they couldn’t figure out an amount to transfer? Maybe they were so busy they just forgot? Regardless what the excuse issue was, there is a new solution that is going to fix everything.

Welcome To The Digit(al) Age

There is a new service out there called Digit. What exactly is Digit? It’s a service that automatically transfers money from your checking account to a savings account. Here is how it works:

  • You sign up to become a member (as of right now there is a waiting list, but my link will get you VIP instant access. No, bottle service is not included.) and link your checking account, the end.

Yeah, seriously that is all you have to do. Digit then crunches numbers in various algorithms to figure out your income and expenses on a monthly basis. Based on these findings, Digit will make an automatic transfer out of your checking account into a savings account. When they made my first transfer, it was for $4.95.

Transfers happen every few days and vary in amount, usually between $5 and $50 dollars and you get a text every time a transfer is made. In fact, text messaging is how the whole system works. When you sign up, you get a phone number from Digit that you can send texts to. Just text a prompt and you will receive a message back from Digit related to your inquiry.

Here are a few examples. Just 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 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
  • VCard: contact card for your phone’s address book
  • Nickname: change the name Digit calls you

Be sure to check out this page for new commands that I might not have reflected above.

Questions and Answers

Now, I am sure you have a million questions regarding Digit. I’ll take the time to answer the most common questions I get when telling people about Digit and if I don’t answer yours, just ask me and I’ll find out.

Is Digit safe? Yes. Your personal information is secured on encrypted computers and is made anonymous. In other words, it would take a ton of work to match up names and accounts, assuming one even got that far. (Note that they do not store your login/password for your checking account.)

How much does it cost? Digit charges $2.99 a month to use. For some, this fee is enough to not make Digit worth it. If you are only saving a couple dollars a month, why pay for a service? They are just taking the majority of your savings in fees. A better option would be to use Qapital. They are currently free and round up your purchases to the nearest dollar and move the money into a savings account for you. You can learn more about them here.

If however you think Digit will be saving you a good amount of money each month, they are still worth considering.

Do I need a savings account? Nope. When you sign up, you are given a savings account by Digit.

Am I protected? Yes. Your savings with Digit are covered by FDIC Insurance, which is currently $250,000.

Are there restrictions? Kind of. As of now, you need to be in the US to take advantage of Digit. Also, only around 2,500 banks participate. The good news is that most major banks are covered. The bad news is that some small community banks are not. The good news though is that new banks are being added all of the time.

How do I get my savings bank? You can get your money back 24/7/365, though it will take one business day for the funds to show up back in your checking account. To get your money, you just text “withdraw” to Digit. Also, you can make as many withdraws per month as you like.

What about overdraft protection? Digit guarantees that they will not overdraft your checking account with their saving withdraws. That is how confident they are in their algorithms. In fact, if they do overdraft your account, they will cover any fees that you are charged!

Does my money in my Digit savings account earn interest? The money that is transferred to your Digit savings account does not earn you any interest. But you can earn bonuses. Your bonus is based on your average Digit balance over the past 3 months and the rate varies. This bonus is earned every 3 months.

Is texting with Digit my only option? Nope. You can download and use their app now instead of texting if you would like.

My Experience With Digit

I’ve been using Digit for almost a year now and there really is nothing that I can complain about with the day-to-day operations of the service. The only major issue I have is that I earn no interest on my savings. But, seeing as how interest rates are basically zero now anyways, it’s not like I am missing out on a huge sum of money. After all, my average savings transfer is $5. But the savings bonus is better than absolutely nothing. However, once my balance gets high enough, I might then transfer the cash back and put it into my CIT Bank savings account where I will earn more in terms of interest. (Update: As of 12/31/16 my total Digit savings is  $1,526.15. I will update this number periodically.)

So do I recommend using Digit?

Yes and no. As I noted above, $3 a month is a hefty fee if you are only saving $15 a month. You would be better off just creating an automated transfer from your checking account to savings account with your bank for free. If you would rather have the option of saving more (or less), then Qapital is a great option.

But if you will be saving $100 a month or more using Digit, you could justify the fee. But again, in my opinion, why pay for saving money when there are countless ways you can do it for free?

[Photo Credit: Laurence Simon]

20 thoughts on “Automating Your Savings Just Got Easier With Digit”

  1. Let me know when I can get bottle service with that VIP status! 😉
    This is a good system for people whose banks don’t provide an option, plus it sounds like it is a lot more customizable, which is sweet.

  2. Automating savings is a great way to treat savings like another bill that has to be paid, and this is a good tool to make it even easier.

  3. Awesome! Convenient too. Another great option for people to start saving. Every little bit we can save builds up to a whole lot later on.
    Shame about the bottle service though. 😀

    1. So very true Joe. Every little bit helps. I love it because I DO have an automatic transfer that has me saving every month, but this helps with adding just a little bit more than I thought I could save every month.

  4. That sounds like a pretty cool service. My wife and I have an automatic transfer through our credit union (we move it to Capital One 360 like you do) but we always forget that the transfer even happens until the balance gets high. Definitely a great idea to do it beforehand because we’ll either forget to transfer it or find something else to spend on otherwise.

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