Saturday, 19 September 2020

Digit App Review

Digit App Review
19 Dec
9:38

Digit is a budgeting and savings assistant that analyzes your spending habits and helps you save a little bit every day. The app uses algorithms to adapt its savings strategy to your spending habits, so you won’t even miss the money that’s being set aside.

When compared with other saving apps, Digit offers unique functionality as it helps you save money without altering your spending habits. However, Digit does not pay interest on your deposits, and its rewards payments do not justify the $5 monthly fee for the app.

What is the Digit app?

At its core, Digit aims to make saving money automatic and well adapted to your spending habits. Instead of feeling like saving is a sacrifice, Digit helps make it something that happens in tandem with your regular spending patterns.

After signing up for Digit, you’ll be asked to connect your checking account to the app. Digit uses algorithms to analyze your spending habits and discover when you can afford to save money. Over time, it will automatically move small amounts of money from your checking account to your Digit savings account.

The four main factors that Digit’s algorithm analyzes when determining how much you can afford to save are your checking account balance, your income — whether it’s a regular paycheck or a more irregular source of income — your recurring bills and your regular spending habits.

Digit has a no-overdraft guarantee, and says it will only set aside what you can afford to save. If it does happen to overdraw your account, Digit will reimburse the fees for up to two overdrafts.

You can sign up and use Digit on its website, or download its iOS or Android app. It’s currently compatible with over 2,500 U.S. bank and credit unions.

Digit savings features

Within the app, Digit allows you to set and customize specific savings goals, such as “rainy day funds” or “honeymoon fund.” While Digit does not pay an APY on savings deposits, they do offer cash rewards for users who save consistently.

The reward comprises a 1% annualized cash bonus. If you save for three consecutive months, Digit deposits in your account 0.25% of your average daily balance from the past three months.

Savings goals

To earn your savings bonus, set up one or several savings goals, including the amount you’d like to save and the date you’d like to have it saved by. Digit withdraws funds from your checking account and deposits the funds in each of your savings goals.

There is no limit as to how many goals you’re able to save for. You cannot combine savings goals, but you can close one goal fund and move the cash into another goal fund.

The amount withdrawn from your checking and moved to Digit savings is typically split up evenly among your different goal funds. However, Digit has a “boost” feature, which allows you to prioritize saving for one goal over the others. Digit will automatically put more money toward the goal you boost, and less money toward the others. You can boost as many goals as you’d like at once.

Partner banks

Funds saved with the Digit app are held in accounts at partner banks, which have Federal Deposit Insurance Corp. (FDIC) insurance for up to the legal limit. Digit allows you to make an unlimited number of monthly withdrawals from your savings goals.

Typically, withdrawals take about one business day to post to your checking account, although the app does feature an instant withdrawal option for $0.99, in which you’ll receive your funds within minutes.

Digit’s fees and other features

Digit is free for the first 30 days, and then charges a fee of $5 per month. While the intuitive savings tool is the main feature of Digit, the app offers several other features.

Credit card reduction

This tool allows you to seamlessly save for credit card bills, and to make automatic payments to any major credit card company with your funds held in Digit. Just set up a “credit card debt” goal within the app.

Student loan debt payments

In the same vein as its credit card reduction tool, Digit offers a student loan debt payment feature. Simply set up a student loan debt goal, and connect your loan servicer and loan account. Digit will then save funds toward that goal as it usually does, and will send the amount you save as a loan payment on whatever date you set. This is meant to be a supplementary payment toward your student loan debt, and should not replace your regularly-scheduled payments.

Secondary user

Digit allows you to link a secondary account, so you and your partner can simultaneously save toward the same goals and have your funds deposited into that joint Digit account.

Advantages of the Digit app

  • Digit’s intuitive, algorithm-driven savings features differentiate it from other saving apps. They are especially helpful for people who don’t want to alter their spending habits but also want to save.
  • The ability to save for multiple goals at once and have the money automatically divvied up accordingly is very useful. While anyone can save money on their own, separating your savings into different sub-funds can be time-consuming.

Drawbacks of the digit app

  • Not offering interest on deposits held with Digit is a big drawback. There are plenty of high-yield, online savings accounts that reward you with up to over 2% APY, which can make a big difference in your budget.
  • With the $5 monthly fee, the 1% annualized savings bonus for saving for three consecutive months is insignificant, and provides little value.
  • Because Digit adapts to your spending habits — rather than changing them — it makes saving more of an afterthought than a priority. If you’re really looking to grow your savings significantly, that cannot always happen without adjusting your spending habits.

Digit vs. other saving apps

Digit isn’t the only savings app out there. We stacked it up against Tip Yourself, Qapital and Joy. Here’s how it compares.

Digit vs. Tip Yourself

  • Tip Yourself is not an automated savings app, so you have to actively transfer funds into your savings account. This is the problem that Digit solves: Moving money for you, helping to take the impulsiveness out of saving.
  • Tip Yourself is a free app, versus Digit’s $5 per month fee.
  • Digit’s credit card reduction and student loan payment features give it an edge over Tip Yourself, which just gives you a place to stash your cash and nothing else.

Digit vs. Qapital

  • Qapital is a goal-based app that makes saving as important as spending. While Digit stashes away cash that is left over after you spend, Qapital puts saving on an equal playing field, by featuring auto-save rules, which sets aside money in savings whenever you do a certain activity like spend money on an Uber.
  • The rules that Qapital features are incredibly customizable, and include rules like saving money every time it rains in your hometown or when a certain celebrity tweets. Digit does not offer anything similar to this.
  • Qapital is not intuitive to your spending habits, while Digit is.

Digit vs. Joy

  • Joy offers a similar service as Digit: It analyzes your spending and then calculates how much you can afford to save. However, Joy falls short in comparison to Digit because it does not automatically transfer those funds for you, like Digit does. Instead, you have to go into the app and make the transfer yourself.
  • Joy is a free app, whereas Digit costs $5 per month.
  • Digit has valuable features like its credit card repayment and student loan payment tools, which Joy lacks.

Is Digit right for you?

If you are truly looking to grow your savings significantly and earn the most bang for your buck, look elsewhere. Digit makes saving money a secondary priority, and puts spending first, making it hard to aggressively save toward specific goals. Instead, put yourself on a budget, learn strategies of self-control or have a percentage of your paycheck directly deposited into your savings account at your bank. That way, you’re saving money first, and then can spend what’s left over.

However, if you’re looking to casually build your savings without much effort and just want to simply start saving something rather than nothing, Digit is a useful tool that is definitely worth the download.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sarah Berger

Sarah Berger |

Sarah Berger is a writer at MagnifyMoney. You can email Sarah here

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Source: https://www.magnifymoney.com/blog/banking/digit-app-review/

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