About 50% of Americans do not have any retirement savings. And just 68% spend less than they make. One thing is for sure: most people have trouble saving money. So when Digit Savings promises to help you "save money, without thinking about it", I think it is worth a look.
Digit is like a digital piggy bank that analyzes your spending habits and income history, then uses an algorithm to set aside small amounts of money that it determines you will not need.
If your savings account is bare and you've had trouble setting aside money, Digit may be just the thing for you. So read on to learn how Digit may help you painlessly build up your emergency fund or save up for a big-ticket item.
How Does Digit Savings Work?
Digit first connects with your bank account so its algorithm can analyze your spending and income and find money it can set aside. Not all banks are supported, but Digit currently supports more than 2,500 credit unions and banks. To get the most out of the service, it's important to have your important bills set up through your bank's online bill pay or paid out of your checking account so the algorithm can take them into account.
Every few days, Digit will transfer a small amount of money (which may range from $1 to $150, but is usually $5 to $50) from your bank account to your Digit savings account. If the algorithm determines you can't afford to save anything, it will temporarily stop transfers. You can also manually make deposits into your Digit account whenever you like.
Digit has a no-overdraft guarantee. This means the service guarantees it won't take out more than you can afford and you will not incur overdraft fees.
Your savings will go into a Digit piggybank. Your savings will not accrue any interest; Digit takes that as a fee for the service, unlike other automatic savings services that charge you a monthly fee. But Digit does offer Savings Bonuses every 3 months. These automatic bonuses, based on your average Digit balance over the last 90 days, give you 5 cents per $100.
When you need to access your money, send a text message to Digit and your money will be transferred back into your checking account. You can also use the Digit app for iPhone or Android devices instead of text messages. With the text messages, you can not only request transfers back to your checking account but also view your balance and tell Digit to save you more money. There are no minimum amounts to worry about, no fees to pay, and the service allows unlimited transfers.
How is Digit Different?
There are a lot of saving services on the market, as well as tried-and-true recurring bank transfers into your savings account. The secret to Digit is it uses an algorithm to take the pain out of saving money. Digit analyzes your spending habits and transfers only what you can afford to save. One week, Digit may transfer $10 to your savings account, another week it may make sense for you to save $40.
Unlike setting up automatic transfers with your bank, you will not need to determine an arbitrary amount to transfer each month. Instead, Digit uses its algorithm to help you save as much as possible -- without you even realizing it -- using a micro-savings format.
Can Digit Savings Help You Save Money?
Digit isn't designed for huge savings goals. But it can help you save money, especially if you have trouble putting aside money each month. Regardless of your average bank account balance or savings history, Digit can help you create a nest egg through micro-savings, even if you can only spare a few dollars a week. The easy "set it and forget it" automation makes Digit not just easy to use, but easy to forget you're using, and the guarantee that you will not be charged overdraft fees is a nice protection that you will not get from a bank.
The service does have its downsides, including the fact that you do not earn interest on your saved balance. But it's a small price to pay if you have struggled in the past to save money.
If you're looking for a simple way to set aside more money each month, and get started on the path to saving money, it's hard to beat Digit.