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If you’re like me, you want to have control of your financial future. You read personal finance advisors; some of whom say “automated saving is a good thing”, and you want to see the best way to place good guardrails to keep your budget intact, to save for things you want, things you need, your children, and ultimately for financial independence. The Digit app is promoted as an automated savings solution for those who have financial goals and could use some help compiling their funds to acquire them.
I told you in my January goals post that I wanted to make more money, save more money, get out of debt, and many more things. Accordingly, I tried a new side hustle that I talk about here, I’ve been hammering away at my keyboard on the blog, and I decided to try the Digit app as another means for intentional saving.
Quite a few personal finance bloggers have written about the digit app. They describe it, but I had not seen anyone who let you look over their shoulder as they used the Digit app. Signed up for the Digit app on 24 December, and I’ve been using it now for one month. My plan for this post is for you to understand my experience thoroughly, so you can evaluate whether it is a good savings option for you.
My Experience Signing Up
When going to the website, the interface is fairly simple to understand. I went to the “sign up here” button after reviewing the pros and cons. My biggest concern was “What are the fees?”, “Are there fees to withdraw?”, and “How do you stop the digit app from overdrafting your account?”.
Right on the front page, Digit answered my questions. It says:
Digit calculates the perfect amount of money to set aside every day — based on your income and spending — and automatically saves it for you. Most days it’ll feel invisible, but it won’t take long to feel like the future you’re working toward is within reach.
- 1% annual cash back on your Digit savings, paid every 3 months
- Withdraw as often as you like, at no charge, with no account minimums
Funds are FDIC-insured and protected by 128-bit bank-level encryption
I was curious how an app could calculate my spending patterns and automate my savings at varying amounts, so I decided to try it on an account I don’t use much first.
Within 20 minutes of signing up, I received a “Welcome email” like this:
|Hey Tiffany, thanks for joining Digit!
Your shiny new Digit account is all set up and ready to go. Digit does most of the heavy lifting and you should see your first automated savings within the next couple of days.
If you’re interested in getting a bit more acquainted with Digit here are some common questions and answers:
If you have any other questions, be sure to check out the Help Center.
We’re excited to start saving for you, and always here if you need us.
A Little Background on My Spending and Savings Habits
I’m a natural saver. Anything I can buy once, I’ll buy once. My buying keywords are “long-lasting”, “lifetime warranty”, or “budget-friendly”. Words that suggest savings are my favorite words to see. I typically save down to the change. I use the Personal Capital app and the Everydollar app to track my budget, savings goals, and my net worth regularly.
Despite the fact that I am VERY intentional about my money, I thought, “Maybe I can see if I slack anywhere and the digit app can help me”. I thought the worse case scenario would be that I would tell my friends who don’t like intentional budgeting about the Digit app because it’s a hands-off savings app.
My Saving Experience with the Digit App
Since I signed up almost one month ago, I have gotten a courteous message daily with the balance on the account that I have connected to my Digit app. The messages are usually a little humorous. They say something like:
Your checking balance today is…Yesterday it was…To see what it changed, reply “why”.
When I’ve replied “why”, they will send me all of my latest transactions that caused my account balance to change. I really like the account balance feature, however, if you would find this feature bothersome, you can customize it in the settings.
I deposited money into my checking account 4-5 times this month to experiment with the Digit app. My spending habits had no regularity, and neither did my deposit habits. I have no direct deposit set up to this account.
How My Account Was Overdrawn By Digit
My balance stayed stagnant at $0.02 for most of the month. I deposited $320 on December 30, 2017, and took it out later that day. On December 3, I deposited $100, and took the money out the same day. On January 9, I deposited $166.00 to pay a bill, and $4.00 was left in the account after the bill was processed. I’m telling you my exact transactions so you can see the irregularity of which I use the account. On January 9, the same day as a bill payment was processed, the Digit app processed a savings transaction for $6.00–leaving my account at -$2.00. Digit texted me saying:
I thought you’d like to know that I just saved for you for the first time. Your Rainy Day fund has $6.50 in it! I’ll stay out of your way going forward but if you ever want to see how much you saved, just message me ‘Savings’.
I went to the Digit website to find out what to do when Digit has overdrawn your account. On the website, there is another customer who seemed to have the same problem. Their question and solution was listed on Digit’s website.
The directions I was given were to text “overdraft” to the number Digit number where I receive the text messages. When I texted “overdraft”, I was given these instructions:
Thank you for reaching out regarding an overdraft—I’m sorry that we may have put you in that situation. To help us look into this as quickly as possible, please respond to this e-mail with the following:
- A screenshot of your checking account with the Digit transaction that caused the overdraft
- A screenshot of your checking account with the overdraft fee charged by your bank following the Digit transaction
- The last 4 numbers of your checking account number for security verification
Once we receive this information from you, we’ll start looking into it. If we determine that Digit is the cause of the overdraft, we will reimburse the overdraft fee to your Digit account.
Let us know if you need anything else, thanks for your patience and understanding!
Once I gave all of the information to the customer service email address, they promptly responded within the same day saying:
My money was added to my rainy day fund including the overdraft fee the same day that I notified the customer support. When I texted “Withdraw” to digit, the money took 3 business days to arrive in my account. I was pleased with how quickly the Digit team responded to the accident. I’m sure as a new company, they are still navigating quirks with the new Digit technology, and I can understand that. I think the intent to create an app that helps people (even those who struggle) to save is a noble cause, so I’m willing to stick around especially since they are fair with their resolutions.
How to Prevent Digit Overdrafting Your Account
To avoid Digit overdrafts, you have to set minimums and pause the app if you know you will not have “extra” funds lying around. For me, I followed the advice of the customer support representative who said to place the minimum balance at $100.00. I’ve noticed even more since using the Digit app that I don’t leave any room for deviation from my budget. I follow the Dave Ramsey plan without using the envelopes.
I assign cash to line items on my budget, and do my best to place guardrails so I cannot go over my pre-planned budget amount. Right now, I know my spending patterns pretty well, and my focus is not so much on cutting expenses or extracting savings from what I have, but rather on making more money. The only budget challenge I did this month was what I mentioned in my January goals. I’ve been challenging myself to cut my grocery budget by $100.00. I’ll tell you how that went in my February goals post.
My Recommendations for Using the Digit App
According to Business Insider, 61% of people don’t track their spending. According to Time magazine, many people use faulty budgeting methods like mental accounting, making a budget but not sticking to it, or not saving enough for the average emergency. Accordingly, most live paycheck to paycheck because they are prolific spenders. The Digit app can be helpful to the majority who want an easy way to save without having to take time or devote much attention. After Digit learns your spending habits, savings is on autopilot.
They have cashback at 1% every 3 months, which is more than the normal bank account, and their re-working their savings incentives to encourage people to save more. I really like what Digit is doing, so I’ve chosen to continue working with it in addition to the other savings vehicles I use; however, since I am a super budgeter, I will have to be intentional about leaving “extra money”, so digit can save for me.
If you haven’t begun saving, or if you are looking for an additional means to save on autopilot, I would highly recommend the Digit app even with its quirks. Give it a try and leave your comments below!
Have you tried automated savings? Which method of automated savings is your favorite? Have you tried the Digit app? How did you like it?