If you can’t seem to get any savings done, there’s an app out there that could help you.
Digit is a service that basically promises to use artificial intelligence to pluck extra money from your checking account and stash it away in an FDIC-insured savings account.
There’s a free 100-day trial period with Digit, but after that the service costs $2.99 per month.
How Digit works
It all starts by connecting your checking account to Digit. Once you’re hooked up, the service uses artificial intelligence to automatically learn your spending patterns. The aim is for Digit to learn when you have some spare funds, based on your income and outflows of money.
Once that’s established, Digit will then transfer between $10 and $30 from your checking account to your Digit savings account every two to three days.
It’s a great way to build a savings habit without having to do any hard work!
But here’s the rub: The savings account Digit gives you will not pay any interest on your money because Digit is not a bank. To compensate, the service does offer you savings bonuses. You get 1% annual cash back on your Digit savings, which is paid out every three months.
So that’s a decision you’ll have to make. If you have a good savings habit built up, you can earn an interest rate close to 1.5% if you go with an online bank. That’s probably a smarter move.
But if you don’t already have a savings habit, Digit can help get you into that habit. So it’s a trade-off.
In late April 2018, Digit announced the arrival of Digit Pay. When enabled, this new function tells Digit to put aside extra money to pay off your credit card debt so you can get out of debt in a shorter window of time.
Digit Pay is slated to roll out over the next few months, but you can reserve your spot on the waitlist today.
And in case you’re worrying about Digit taking money you can’t really spare, the company believes so much in the artificial intelligence it uses that they will pay up to two overdraft fees that you incur if they’re ever wrong.
When it comes time that you want to withdraw some of the money you’ve saved, you just send Digit a text message that says ‘withdraw.’ The service will then send the money back to your checking account by the next business day. You’re allowed unlimited transfers with no minimums and no fees.