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Digit Review: The Easy Way to Save

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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.

digit review - The easy way to save

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.

Q&A

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.

Pros

  • 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.

Cons

  • 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?

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{ 15 comments… add one }

  • Ernie Zelinski December 7, 2015, 1:15 am

    Digit may be okay for certain people but it is not for me for a number of reasons.

    I believe that the key to saving money is being “truly committed” to saving money. This means operating out of high intention and integrity and not having any excuses for spending money that should be saved. No excuses, period. That’s true commitment.

    There are two ways to increase your savings. Reduce your expenditures or increase your income. Even as a fairly well-off person, I am always looking for ways to increase my income. But earning more does not always mean that I will spend more.

    • retirebyforty December 7, 2015, 10:37 am

      I think being committed is the key also. It’s really difficult for young people and they need as much help as they can get. Digit might be a good tool for them to get started. Of course, we’ve seen many people get deeply into debt and turn it around as well. Sometime, the best lessons are the most painful.

  • Diedra B December 7, 2015, 6:30 am

    I’ve been reading your posts with great interest. They help me to be positive and try to stay disciplined.
    Also, thanks for acknowledging Skynet. Funny, but in a scary kind of way.

    Anyway, back to the topic. This sounds like it could be a good solution for my family. It wasn’t until some issues came up and we had to start paying a nanny to take care of our child that we realized how much extra cash we had. We’re truly blessed to be able to do that but my husband finally asked me, “how come we are paying so and so this amount of money and we weren’t saving that money before, when we didn’t have to pay for child care?”

    If we had been using something like digit, we would have saved much more than what we thought we could save.

    • retirebyforty December 7, 2015, 10:40 am

      Yes, you should try it out. It’s an easy way to set aside some money. Once you get a sizable amount, you can transfer it to an investment account or another saving account. Good luck! Skynet is a bit scary…

  • Todd December 7, 2015, 7:03 am

    Hey Joe,
    I tried Digit after reading about it on RB40 a little while back. It has worked great for me, a couple of reasons why –
    1. I did not want to open another account, but wanted to save for an upcoming trip, so I figured this may be a good way to do it. I intentionally try not to look at my balance, but did today and I’m up to over $450, and I honestly have not missed it. I do figure it in when I balance my checkbook every month, but so far it has not caused any problems with low funds (I keep a cushion built-in).
    2. Digit sends me my checking account balance every day. At first I thought this would be annoying, but it actually helps me keep tabs on my balance and I can usually tell if something is ‘off.’
    I have not withdrawn any funds from Digit yet, but I don’t anticipate any problems, since Digit is tied directly to my checking account.
    One other note- My bank did call me an I personally had to verify that I wanted Digit to access my account before they would allow it, which was completely fine by me.
    Love your site.

    • retirebyforty December 7, 2015, 10:42 am

      That’s a great way to save up for a trip. I agree with the checking account balance. It’s actually pretty useful.

  • freebird December 7, 2015, 8:51 am

    I don’t text so I guess it’s not for me, but I like the concept of a tool that incentivizes doing something that benefits our long term. It’s about time someone came up with a way to fight fire with fire, namely the mind games merchants play to persuade us to overspend. You’d figure banks (especially online banks) would nudge us towards growing our savings to increase their deposit base, but in my experience they’re remarkably neutral and seem to be interested only in processing transactions.

    I haven’t looked into details of Digit, but it seems the way their system improves saving is by making your bank balance look smaller than it really is, so it’s a contrived shortage. Maybe they’re already planning this but if not, perhaps they can add ‘coaching’ or positive reinforcement into the mix along the lines of what hooks people into video games? Maybe offer something that has no dollar cost but can generate perceived value — for example collaborate with popular gaming platforms to ‘earn’ special privileges when you reach certain savings balance targets, that sort of thing. Given the negative image videogames often carry, they may welcome the chance to participate in something that contributes to the greater good.

    Looks like a step in the right direction, hopefully they find a way to push harder!

    • retirebyforty December 7, 2015, 10:48 am

      I didn’t think text would work for banking, but I’m a convert. It’s really easy. I text a little so it wasn’t a big hurdle for me.
      I think Digit is growing so who knows what they’ll come up with next. It would be nice to get young people to start saving at an earlier age.

  • cato December 7, 2015, 9:49 am

    I’m in! Looks like an interesting idea. $5 referral coming your way RB40.

    • retirebyforty December 7, 2015, 10:48 am

      Thanks! Good luck with your saving.

  • Mike H. December 7, 2015, 10:33 am

    I’m guessing that this service isn’t going to be the best for people who frequent this website. But for the average American, who over-spends and under-saves at every turn, this could be great.

    My hesitation is the lack of an interest-bearing vehicle (0.05% per quarter doesn’t count to me). This is the same reason why my actual savings account with Chase has been at exactly $1000 for the past few years…earning $0.01 per month in interest. I auto-deposit into Betterment to the tune of a few hundred per month, and I manually deposit into Motif every month as well. These are both actual investments earning market interest, so a non-interest account doesn’t hold any sort of appeal to me.

    This was mentioned in the article, but many credit unions offer an interest-bearing checking account – I’ve seen 3% relatively often, and somebody out there offers 7%. It’s worth noting that I don’t use these either because of all the requirements (10 debit card transactions a month, etc.). Basically, any service that can auto-deposit a certain amount of money into an interest-bearing vehicle holds more appeal – to me – than Digit.

    But if you’re awful at saving, and running close to the wire on your account balance…yeah, I can see the appeal of saving $3.50 every other day.

  • Michelle December 7, 2015, 11:01 am

    I love Digit. Highly recommend!

  • Kalie December 8, 2015, 5:38 am

    We haven’t tried Digit yet, as savings is an pretty good area for us, but I agree that having it automatically deducted is a great idea. We do that for our 401k also and it helps us stay on track and limit spending while maintaining our rate of investing.

  • Stockbeard December 8, 2015, 11:31 am

    Joe, thanks for the honest review. I agree that the audience of this blog probably doesn’t need this additional tool in general. I also agree with the idea of consolidating. Due to various reasons my household’s money is currently in 9 different places and it’s been a nightmare, people should have the bulk of their savings with their 401K or their favorite broker.

  • Smart Money MD December 13, 2015, 10:01 am

    Interesting service. I think that it is definitely useful for some people who need an additional discipline to stash away their earnings. It is also helpful to keep up the habit long term, through automation. If you already are somewhat conscientious about money, then it may just be another bank account.

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