Digit, an application developed by Hello Digit, Inc., helps you automatically and painlessly save money in small dribs and drabs. The San Francisco-based company was founded in January, 2013. Its goal is to encourage you to save small amounts of money you don’t need right now without having to think about it.
How Digit Works
Every few days, Digit sweeps your checking account and moves from $2 to $50 to an FDIC-insured savings account. Digit applies an algorithm to determine how much to sweep, based on:
- Checking account balance
- Recent spending patterns
- Upcoming bills
- Upcoming income
Digit evaluates these factors to figure out an amount of money you won’t really miss if it is transferred to a savings account. You don’t have to specify a preset amount to transfer. According to Digit, the app will never transfer more than you can afford, but if it messes up and causes an overdraft, Digit will reimburse you for the overdraft fees.
Signing Up for Digit
All communications with Digit receive strict 128-bit encryption.
Usage and Fees
The Digit app makes it easy for you to see your savings balance, the total you’ve saved since signup, total number of savings transfers, the average amount of money transferred per transaction, and the average number of day between transfers.
You can instruct the app to move money either way between your savings and your checking, to view upcoming bills, check when you’ll next receive interest and to temporarily halt automatic transfers. If you prefer, you can send SMS text messages, but be aware you’re on the hook for any message charges. You can limit how often Digit sends you an SMS text message about your current status, thereby saving you a few pennies in text messaging fees.
Digit is “free,” in that you don’t pay any fees. However, the money swept aside into the Digit savings account earns a paltry .005 percent – that’s nickel on every $100 left in the account for at least three months. Hello Digit makes money on the difference in the interest you’d earn from a banks savings account or CD and what it pays you.
Hello Digit is accredited by the Better Business Bureau and earns a rating of A- on a scale of A+ to F.
- Automatic: Perhaps the best reason for using Digit is that its automatic. Unless you find it taking out too much money, you really don’t have to give it any thought. Digit is squarely aimed at those Millennials who tend to be tech-savvy, not too rich and not that experienced with finance.
- Simple: Digit is easy to use, whether you use the app or SMS text messages. You don’t have to lift a finger for your savings account to grow slowly.
- Good for routine cash flows: Digit works best if your income and expenses don’t vary that much from month to month. It learns from your habits to adjust the amount it transfers out every two to three days. If your budget is dominated by a regular paycheck or benefit, and routine monthly bills, Digit should do a good job for you.
- Referral reward: You get a $5 reward for each person you refer who signs up for Digit’s service.
- Paltry interest: A nickel on $100 every three months won’t put you through Harvard. But that’s not the point of Digit. The app is all about saving regularly and in an amount you can afford. It’s aimed at people who otherwise wouldn’t save anything at all. If you are disciplined enough to care about your savings interest, you might do better with an online savings account.
- Limited Website: The Digit website is useful for signing up and checking your balance, but you can’t make transfers there. If you are the kind of person who is permanently connected to your phone, you probably wouldn’t use the website anyway.
- Mystery: Digit is proud of its savings algorithm, but does little to remove the veil of mystery surrounding it. If you are uncomfortable about an app deciding how much you should save, you might prefer an alternative.
- Not for the unpredictable: Many Americans work as self-employed freelancers or as contractors and consultants. Your earnings may be highly volatile, which makes it hard for Digit to successful predict how much to move into savings every few days.
- Limited overdraft protection: Digit provides reimbursements for up to two overdraft events. After that, you’re on your own. However, if Digit causes overdrafts more than once, it’s probably not a good fit for your lifestyle.
Within its constraints, Digit seems to perform well. You won’t get rich using Digit, buy you may save enough to handle unexpected expenses or opportunities. The app is hassle-free, easy to use and has some protections built in. It’s free, and the amounts it moves are modest. The best way to see whether Digit accommodates your lifestyle is to give it a try.