If you’ve ever had trouble paying yourself first and establishing a reliable personal savings account, you may want to check out a new service called Digit. Digit is the modern day equivalent of emptying out your pockets and wallet of loose change into a piggy bank.
Personally, I really like Digit as a separate savings account for travel. While I redeem my credit card rewards for flights and hotel stays, there are more expenses than just flying in and sleeping. With Digit, I have an automated, dedicated savings account for those travel “extras”, like going out sightseeing or spending money on delicious food tours. Curious about Digit?
Digit seeks to automate your savings by studying your purchasing and withdrawal habits. Every few days, Digit transfers a small amount of money (between $5 and $50) and stores it for you in its own FDIC insured Digit savings account. When you want, text “Withdraw” to Digit to transfer that saved money back into your checking account. Sounds simple, right? What’s the catch?
The Deal with Digit
The only “catch” with Digit is you won’t make any money on interest from your Digit savings account. However, given the sorry state of interest for savings accounts right now, that’s not a very big trade off.
This is how Digit provides the service for free: whatever interest on your Digit savings account, Digit keeps. Bank of America’s savings account interest rate, for example, is currently 0.01%, so Digit is betting on you preferring automatic savings to a paltry interest rate.
Who It’s For
If you have trouble making automatic withdrawals into your savings, or need an extra push to save more, Digit could be good for you. Once you’ve signed up with Digit, the service reviews at least three months of your purchase and withdrawal history and determines where it can save you money.
That’s one of the best parts about Digit: it doesn’t save random amounts of money, but instead makes predictive determinations on how much you can save every few days. Digit is so confident they are making the right withdrawals for you that they have a no-overdraft guarantee, meaning you will be reimbursed if it does withdraw too much money.
Like I mentioned, I’m a fan of using this as a way to save up more money for travel. Without it, I would never know that I could save an extra $100 over a few months. If your time frame is longer than a few months, you may be able to save a couple hundred dollars with Digit to put toward your next vacation!
Why Use Digit?
Beyond having an extra to way to save small amounts of cash every few days, Digit can be used to save for a trip, holiday gifts, or at the end of the month to pay off debt. Just imagine signing up with the service now, in January, and cashing out in December for holiday gifts. You would probably have a lot saved, as $5 a week adds up!
When you want to take money from your Digit savings, simply text the word “Withdraw” to Digit, and your money will appear in your checking account within the next business day. Digit allows for unlimited transfers with no charges, which means you can transfer money back as often (or infrequently) as you like.
Digit is only available in the US currently, although the company has plans to expand internationally. While Digit serves 2,500 different banks and credit unions, yours may not be on the list.
In terms of security, Digit is FDIC insured, so your money is guaranteed up to $250,000. All of your transactions are anonymized, encrypted and securely stored although, of course, no company is “unhackable.” The same precautions you would take logging in to Personal Capital or your bank account, you should take with Digit (i.e. no signing into accounts over open, free Wifi).
Other than that, Digit is a modern day piggy bank… except one that does all the work of finding your loose change for you. If you’re interested in checking out this service, I’d appreciate if you used this affiliate link to sign up here.
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What would you use Digit for? Is having an extra, dedicated savings account appealing to you, or do you use other methods to save?