Saving money is relatively easy for me. I track our cash flow religiously and I know how much money is coming in and going out every month. We live below our means and we usually have extra money left at the end of the month that goes toward saving or investment. However, I know saving isn’t easy for everyone. The U.S. personal saving rate is just 5% and that just isn’t enough to fund a comfortable retirement.
Saving money is particularly difficult when you’re just starting out and don’t have a great handle on your finance. There are a lot of things that can trip up your saving goals when your finance isn’t stable yet. You job might pay irregularly. You might have some student loans or consumer debt. Your car might break down and you’ll need to stop saving to fix the problem. Saving is tough and the best way to get started is to automate it. That’s one of the reasons why I love my 401k so much. The contribution is automatically deducted out of the paychecks and I never missed it. What if you can bring the same principle to your saving account? That’s what Digit can do for you. Actually, it’s even better than auto-deduction because it’s smarter than that. If you have trouble saving money, then read on.
What is Digit?
Digit is a free service that will help you save money. Basically, it will take money out of your checking account and put it into your Digit account. Sounds simple, right? Actually, it’s not that simple. Imagine what you have to do to transfer some money from your checking to your saving account. You need to see how much money you have in the checking account, check what bills are coming due and check if your account is meeting the minimum balance. Did you send a check that wasn’t cashed yet? Did you spend money yesterday? There are actually quite a few things you need to think about before you can transfer money from your checking to your saving account. We are all so busy with our lives that we don’t have time to do this very often. I am on top of our finances and I only do this about once a month.
Digit will do all this thinking for you everyday! They will go over your spending pattern and balance history then transfer a small amount to your Digit account when it is safe to do so. It’s like having your own personal accountant. (It’s not quite Skynet, but robots really are taking over the world a little at a time….) See how much Digit has saved me so far.
March 1, 2016 balance: $1,431.52
Digit is text based
Here is the other ingenious part of Digit – it’s text based. Can you really do your banking through text? I was doubtful before I signed up, but I’m a convert. It’s really simple and easy. Texting is a great supplemental interface to a banking account.
I used to log into my credit union’s website everyday when I was working an office job, but I don’t do that anymore because I no longer sit in front of the computer all day. Digit is a great way for me to keep on top of our liquidity. I never imagined that it would be so useful. Digit sends a text every day to tell me how much my check balance has changed. I could text back ‘why’ to see what caused the balance change. I can transfer money between my credit union and Digit. I could even set the minimum threshold so Digit will leave my account alone when the balance is a little low. Here are some samples from my phone. You can see the list of Digit’s text commands here.
Here are some info from Digit FAQ page.
- Is this a pyramid scam? All funds held within Digit are FDIC insured up to a balance of $250,000 so no, this is not a pyramid scam.
- Is Digit safe? Digit uses state-of-the-art security measures. Your personal information is anonymized, encrypted and securely stored.
- Will Digit make me overdraw my checking account? Digit will only transfer a small amount so it shouldn’t have that kind of impact. If Digit overdraws your account, they will pay the overdraft fee. Also, you can set a minimal threshold so digit doesn’t touch your checking account.
- Do I get any interest? You’ll get 5 cents for every $100 you keep in Digit for 3 months. That’s not much, but at least it’s something.
- Does it work with banks outside the U.S.? Unfortunately, Digit is U.S. only at this time.
- How do I access my money? Just text ‘withdraw’ to Digit and you’ll be able to transfer the money to your checking account.
Digit Pros and Cons
Digit has been around for about a year, but I hadn’t joined until recently. Frankly, I don’t need Digit. I’m on top of my cash flow and I don’t have any problem with saving money. I’m pretty sure most of our readers are like this too so I wasn’t sure if it was useful. However, I realized that we have some younger readers, too. Digit is perfect for the younger crowd struggling to save money. I’m a bit late to review Digit, but I hope this is useful for some readers. Digit is another tool in our arsenal to retire early. Most of us might not need it, but I’m sure it will be useful to some.
- Automated saving – You can’t beat automated saving. It’s one less thing to have to worry about.
- Text banking is great! – I really like the texting interface. It’s just right for me. Don’t pooh pooh it until you try it. 🙂
- Referral – You can get $5 when you refer a friend. Yes, this is part of the reason I signed up.
- Interest rate is low – You get .05% every 3 months. So I guess that’s about .2% annually. That’s quite low. I just opened a reward checking account at my credit union and I should get 1.5%. This is a big downside for me.
- Too many accounts – I don’t like to having my money spread all over the place. I’d rather consolidate it as much as I can.
- Text based – If you don’t text, then forget about Digit. That’s the only interface.
- Does not work with every bank – Digit supports over 2,500 financial institutions within the U.S., but not all banks.
All in all, I like Digit. It’s perfect for someone who needs help saving money. It’s not always easy and we could all use a little help sometime. Digit is also a great way to save up some fund for a big expenditure like taking a trip or buying a car. We’re planning to take a trip to Thailand next year and Digit will be a great way to set aside some extra money.
Here is a video from Digit if you’d like to learn more.
If you like what you’ve read about Digit, you can sign up through my referral link here.
Do you think Digit is a good tool or is it just another account to complicate your life?