Note: I was just featured as Digit’s Featured Member. You can read more about me over at the Digit blog. As you will soon learn, I absolutely love Digit and am grateful to be part of their “We Are Digit” series. Thanks for the opportunity Digit!
Want to find a way to save more money without having to do much? Maybe come up with a little extra money to pay down debt or invest? Well, Digit* might be the service you have been looking for! I have been using Digit since the end of February and it has helped me save over $2,400 so far and I barely had to lift a finger to do it.
For those of you who have never heard of it before, Digit is a service that
automatically figures out when and how much is safe to save based on your lifestyle. Digit doesn’t require you to figure out an arbitrary amount to transfer every month.
Essentially, Digit links to your checking account and uses an algorithm to review your cash needs at any point during the month. If it finds that you have a little extra cash in your account than you need, it will make a transfer out of your checking account to your FDIC Insured Digit savings account. Digit believes in their algorithms so much that they also offer a no overdraft guarantee – if Digit overdrafts your account, they will pay the fees!
Instead of being a standalone app, Digit works with the end user via SMS text message. This is actually one of my favorite features as it makes it incredibly easy for me to realize savings on every day transactions. When we save money at a store (ex. using a coupon), I will send a text message to Digit telling it to save that amount of money. This way, when I save money doing something, I actually realize the savings. One quick text message and everything is done.
Here is a quick video from Digit that does a great job explaining the concept:
For a long time, the biggest issue that I had with Digit was that you could not earn interest from your money in your Digit account. However, Digit has fixed this issue by introducing Digit Plus. Digit Plus is a rewards program that pays you rewards anytime you leave money in your Digit account for 3 months. For every $100 in your account for 3 months, you receive $0.05. Now, yes, this isn’t going to make you financially independent, but with most savings account rates so low these days, the rewards amount is comparable to many accounts. However, don’t let the small rate of return should sway you away from the service. If you want to get a higher rate of return on that money, set up a system to routinely move funds out of Digit and put it into a high-yield savings account, Roth IRA, or taxable investment account. By using Digit as a tool instead of a holder of your savings, you can reap the benefits of the automatic savings but at the same time, put the money to work for you. Use Digit to help you pay down loans, build your emergency fund, or invest.
Digit has also just added a new feature that allows you to stipulate a minimum balance that you can keep in your checking account. This service is specifically helpful for people who have minimum balances on their checking account or they will be charged a fee (and if you are being charged fees, it might be time to check out Magnify Money to find one that doesn’t!). It also works well for those people who like to keep multiple months of expenses in their checking account rather than a high-yield savings account.
So far I have had a very positive experience with Digit. I have been able to capture money that I had laying around in my checking account that was not being put to use and was able to apply the money to help pay off my student loans. Over the first 5 months I had the app, I was able to put an extra $900 towards my student loans. Once a month, I would remove the funds that Digit had saved during the month and use those funds to send in an extra payment. Digit transfers funds back to your checking account quickly. In my experience, I routinely had the money back in my checking the next day. Now that I have paid off my loans, I am transitioning to contribute my monthly Digit savings to my Roth IRA and then taxable accounts.
I have used a lot of financial products over the years but I have to admit, Digit is one of my favorite ones. I find the system extremely easy to use and is a great way to save more money without having to manually do it. If you are looking for a way to save a little extra money without a lot of extra work, definitely try out Digit*. When every dollar counts, why not save a few more of them without thinking about it.
Have you ever used Digit? If so, what do you think of it?
*This is a referral link. If you click on it and sign up for the service, I will receive a small commission. As always, all opinions on this site are my own and are not swayed by commissions. Plus – I really really do love Digit