*While I have affiliate links on this page (look under Other Good Stuff for things I endorse) I am NOT getting paid by this company. This review is just from my own experience (although I wouldn’t mind being an affiliate).
Do you have trouble saving money? Even small amounts? That is apparently true of most Americans because 70% of us live paycheck to paycheck. Most people don’t have the cash to take care of a $400 emergency. So how can you try to do some savings that could be used for emergencies or just get in the habit of savings in general.
Now I should note that I am talking about savings that goes BEYOND retirement plans. I think everyone should be mandated to save something for retirement. But even people who start saving for retirement may have problems just putting a few dollars away. So how is it possible?
Well, that is the beauty of technology.
You might have noticed over the past couple of years a number of services advertised on TV about how some banks will round up your dollar purchases and put that money into a savings account or something of that nature. Well, a number of technology firms have taken this one step further. The company DIGIT is one of them (as well as others like Acorns).
I actually wanted to increase my savings so I decided to give DIGIT a try. And here is how it has worked out so far.
How Does It Work?
Digit, like some other companies like Acorns, are dedicated to helping improve savings. In essence, it works like this. You sign up for an account on Digit’s site. You connect your checking account or savings account to that particular account (you can find their app or go to their website).
Digit has a specific algorithm that they use to determine how much money they can take out daily. Sometimes it could be $.50 or $2 or even more depending on how much money you have in your account. That money is then automatically transferred to your Digit savings account. The idea is that they take small amounts of money, which you probably won’t need that much, and it forces you to save.
You can get the first 3 months free, but then they do charge a $2.99 maintenance fee per month after that. However, that money is usually subtracted from your account. Also, if your account is overdrawn because of a withdrawal from Digit they automatically refund the money AND they will pay for up to 2 of your overdrafts. And they DO NOT take money out if there is no money in the account.
You can access your money anytime and just have that money transferred back into your checking account (something I did last week).
Advantages to Using Digit
There are several advantages to using a saving technology like Digit.
First, it will do the saving for you. If you can’t save, even $10, then having something automatically taken out might actually be a good thing for you.
Second, depending on how much money you have in your checking account you might be able to save some significant money fairly quickly. I was able to save almost $1000 within about 3 months and I didn’t even really missed the money.
Third, you can really access the money whenever you want. As I noted I contacted Digit and had that money transferred to my checking account and it was there within 2-3 business days.
Fourth, it only takes out money that it doesn’t think you need. Let’s be honest most of us spend our money on frivilous stuff. We buy overpriced lattes we don’t need. Go out to eat when we should bring our lunch. Stop at the convenience store everyday and pick something up, etc. I can tell you didn’t really miss the money because it was often only a couple of dollars at a time. And it was an everyday occurrence so I just got used to it.
Disadvantages to Using Digit
Despite my satisfaction with Digit there are some drawbacks. In fact, full disclosure I haven’t seen any deposits in my Digit account in almost 2 weeks even though I have money in my checking account.
First, disadvantage is that you have to pay $2.99 maintenance fee after 100 days of free use. That is $36 a year. I could use that money somewhere else. However, if you are one of those people that puts money on a prepaid debit card then you have to pay to load those items all the time. This might be a good thing for you. And $2.99 is a small price to pay to actually increase your savings, particularly if you cannot.
Second, Digit’s software doesn’t always work with every bank. Currently, my digit balance is at $0. I transferred the money I had in there into another savings account. And it wasn’t because I didn’t like Digit, but apparently my credit union’s software is INCOMPATIBLE with Digit’s algorithm. In fact, a customer service representative told me that they were having problems with Acorns as well (similar to Digit). I took that to mean that there are some banks that don’t work well with Digit. Maybe there banking isn’t that sophisticated or whatever, but the technical difficulties have become too much. So right now, unless my bank updates their security, I might have to close my Digit account or close my bank account, which I probably won’t do. If you are going to use Digit it probably works best with MAJOR banks or credit unions. My credit union might be too small for it to work.
That is the biggest pain of all this. This was working for over six months and then all of a sudden on November 1st it stopped. I am not sure why, but I still can’t create a connection between my checking account and my Digit account. So I might have had my last experience with Digit for a while. I hope they can get it fixed, but it has been almost 2 weeks and nothing so far.
The Bottom Line: If you are a person who can’t save or want to supercharge your savings, these financial sites like Digit and Acorns might be for you. I actually really like my experience until all of these technical difficulties. And considering I am NOT a tech person that is saying a lot.