I’m always interested in tips to save extra money. Having a wife that works as a Disney travel planner means that we take our 2 girls on the occasional trip to Orlando. Taking a family of four anywhere is expensive, so I’m always looking for apps that will save money, or better yet, make money.
My wife turned me on to this cool service that does both. The service is called Digit and has been featured in Wired, Forbes, and the New York Times. Digit saves money for you by reviewing your daily checking account transactions, applying an algorithm and transferring small amounts of money a few times a week into a separate savings account.
Digit’s algorithm considers pay days, rent, bills, spending patterns, and average balance to understand what amount can be safely set aside in savings every week. This of course varies from person to person, but it’s usually somewhere in the range of $10 to $30 per week. Digit makes it easy to save money toward a big ticket item, a vacation, or a rainy day fund.
Questions You May Have
When my wife told me about Digit, a few questions immediately came to mind. I’ve outlined my questions below and what Digit had to say about my concerns:
The first of which being overdraft issues. What if Digit pulls too much money out of my checking account and forces an overdraft charge.
“We believe so strongly in our math and the ability to safely identify money you don’t need that if we overdraft your account we’ll pay the fee.”
The next question I had was regarding the savings account. The account Digit saves your money in is an account Digit sets up for you. Is it safe?
“Digit uses state-of-the-art security measures. Your personal information is anonymized, encrypted and securely stored. All funds held within Digit are FDIC insured up to a balance of $250,000.”
Why does Digit do this for free? How are they profitable?
“Digit is offered as a free service because any interest earned on your savings funds our operations. Digit plans to offer ways to get a return on your savings in the future.”
Lastly, and most importantly; How do I get my money back from Digit?
“You can withdraw your savings 24/7/365 and as many times as you want per month. Just text Digit ‘Withdraw’ if you’d like to move money from Digit to your checking account.”
Once you send the text, the money shows up in your checking account the next business day provided the text is sent prior to 4:00 PM PST. Otherwise, the money will arrive in your checking account in 2 business days. Consider the following examples Digit provides.
- If the transfer is before 4pm PST Monday- Thursday it will settle next day.
- If the transfer happens after 4pm PST Monday – Wednesday will settle in 2 business day days
- If the transfer happens after 4pm PST on Thursday it would settle on Monday.
- If the transfer happens before 4pm PST on Friday it will settle on Monday.
- If the transfer happens after 4pm PST on Friday the funds would settle on Tuesday.
- If the transfer happens on Sat or Sun any time it will settle on Tuesday.
- If the transfer happens on a bank holiday, funds will settle in 2 business days.
Why Not Just Do It Yourself?
Many banks have automated transfer functionality where a recurring transfer can be set up between a checking and savings account. While this functionality seems useful, I am typically dissatisfied with the results in practice. Once I set up the transfer I’m constantly checking and adjusting the amount due to the expenses I anticipate
Digit’s algorithm alleviates this issue. Instead of me constantly adjusting the transfer amount based on upcoming expenses, Digit analyzes my spending habits, and has learned my typical income and expenses. Using that information, it knows what I can afford to set aside. As I said before, they are so comfortable with their algorithm they will cover any overdraft fees, should they occur.
Using Digit Commands
While I call Digit an app, technically it’s a user account that you interact with via SMS text. There are various commands you send via text to Digit and the services responds as if you are talking to an actual person.
For instance, I can text “Save” to Digit and Digit will respond “Your checking balance is $1240.03. How much would you like to save?” Respond with a text of “10” and Digit will transfer $10 to your Digit savings account. (This is a manual savings command used to transfer funds in addition to what digit saves using it’s algorithm.)
Here are a list of commands that can be used with Digit and what they do:
- balance – shows your registered checking account balance
- savings – shows your Digit savings account balance
- recent – shows your recent transactions
- bills – shows your upcoming bills
- withdrawal – withdrawal money from your Digit savings (Digit will text you asking how much.)
- save – money from your checking to your Digit savings (Digit will text you asking how much.)
- pause – pause Digits automated savings transactions
- settings – adjust Digit’s notification settings.
- commands – list these commands
There are also a few “Easter-egg” commands, like the response I get when responding with the text “Awesome!”
Signing Up for Digit
The sign up process is a breeze. Here are the steps to get started
- Sign up for Digit using this referral link
- Enter your “Name”, “Email”, and chose a Password and click “Sign Up for Free”
- You will then be asked for a phone number. Digit will send a code to this number via text which you will need to enter on the page.
- Once you enter the code, choose your bank and sign in using your bank account’s online id and password
Digit supports over 2500 banking and credit institutions. They also provide a means to request your bank be added to their service if it isn’t currently supported.
A Money Making Opportunity
Not only can Digit be used to save money, but for a limited time Digit will deposit $5 into your savings account for every friend you can refer to Digit. This can be done through a personal referral link (like the ones in this article), Facebook, Twitter, or Google+. Since Digit is free to try and requires no commitment this appears to have quite a bit of earning potential.
We’ve been using the service and it’s a seamless way to save. It’s especially useful to people who typically have trouble saving. It’s also a good idea to sign up now while they are offering the referral bonus. It’s an easy way to make a few bucks to add to the pile of cash Digit is stockpiling for you.