Digit is a free app that analyzes your spending habits and automatically makes small automatic transfers from your checking account to a savings account.

Learning how to put your savings on autopilot is one of the best things you can do for your money. And in addition to automatic transfers, it’s best to keep your money somewhere you (almost) forget exists.

That’s important for everybody, but even more so when you’re on a tight budget. I’ve been there, and I know how the urge to pause saving transfers or, worse, raid the savings account can come all too often.

So credit is due to the founders of Digit.co, a new app that makes automatic saving virtually invisible.

Digit works like this:

You link your checking account to Digit’s secure Website. (It takes 5-10 minutes and you’ll need your account and routing numbers plus answers to any security questions on your account).

You confirm your account via text message. After setup, you can control your account almost entirely by text – you simply text Digit commands like “check balance” or “withdraw”.

Over the first couple of days, nothing happens. With their proprietary algorithm, Digit analyzes your historical spending and checking account balances.

Then, Digit makes small periodic savings transfers from your checking account to your Digit account. The transfers are small (a few bucks) and will be timed (presumably) not to interfere with bills or other expenses.

Your Digit savings balance grows. You can pause transfers or withdraw your balance anytime, but mostly it should be used as a (nearly) forgotten emergency fund.

Perhaps Digit won’t replace a larger account set up for large unexpected expenses, but I think of it like an online change jar. In a year or two, perhaps there will be something you need a couple hundred bucks for but feel you don’t have the cash – until you remember your Digit balance sitting there!

At the moment, Digit is completely free to use, but they don’t pay interest on your savings balance. With even the best savings account interest rates barely scraping 1 percent, that doesn’t seem like a terrible price to pay for the benefit of forgotten savings.

What’s the catch?

So the idea behind Digit is pretty sweet, but what’s the downside?

First of all, some users will have issues linking their bank account.

Like all Web and mobile apps that require linked bank accounts (think of Mint and other budgeting apps, if you’ve ever tried them), Digit can connect to hundreds of major financial institutions. If you’ve got a big bank, chances are good they can connect.

But even after you’ve connected, some banks have security features that make it more difficult to maintain that connection. I have TD Bank, for example, which requires you to answer a security question every time you log on from a new browser. Digit wants to analyze my checking account daily, which means that every day I get a text message asking me to answer the security question. That’s a hassle that, unless remedied, would probably lead me to abandon the service for now.

Similarly, some small banks and credit unions may not be able to connect to Digit. The only way to know for sure is to try.

My verdict on Digit is that it’s a genius idea for helping us save in a way that we may not even notice. Every user’s experience will vary depending on your bank’s technology, but with a smooth connection Digit should be as close to “plug and play” as a financial app can get.

Try Digit now (it’s free)*

*Digit also pays $5 for every friend you refer (so if you signup, thank you! And don’t forget to recommend it to your friends to seed your own digital change jar!)

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About the author

Total Articles: 353
David Weliver is the founder of Money Under 30. He's a cited authority on personal finance and the unique money issues he faced during his first two decades as an adult. He lives in Maine with his wife and two children.

Article comments

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Douglas says:

Digit is free only for the first 100 days if you read everything on their page. Then it is $2.99 a month. While that is not an amount that will break the bank, still $36.00 a year is, $36.00 a year. I am not saying it isn’t worth it. It’s just since 2015 they decided to make some money. So I am actually paying for part of your referral fee if I sign up.

Tony says:

Hi David,
I have TD Bank too and have the same problem you did. How did you get around that? How do I answer the security question through the Digit.co website? I’ve created a ticket with Digit and sent many emails. I got one response saying it was fixed, but when I logged in, I still had the problem.

I really hope this can be fixed! HELP!

David Weliver says:

Hi Tony: For me it was fixed once I replied to the texts with the answers to each of my 3 security questions…it took a few days because each time it would get a different question.

I thought it would go on forever, but once I did that, the text reminders stopped and everything started working. Hope you can figure it out.

Matt D says:

Digit is an interesting idea, but raises some questions for me.
1. The terms of service say that the funds are held at a bank, but are the funds held at a bank in the customer’s name or in Digit’s name?
2. If the funds are held in Digit’s name, how are the funds for each customer FDIC insured up to the FDIC limit?
3. If the funds are held in Digit’s name, what happens to customers’ funds if Digit goes out of business? Are customers’ left to try to get their money back alongside the other creditors?
4. If the funds are held in customers’ names, it raises question how the bank(s) where funds are held are meeting OFAC and other regulatory requirements to verify customers.
5. If the funds are held in customers’ names, how do customers get their funds if Digit goes out of business? I could not find where it was specified what bank held the funds.
6. If the funds are held in customers’ names, are customers going to receive a 1099-INT to pay taxes on the interest the account earned? Per the terms of service, the rights to interest earned on the funds are irrevocably assigned and transferred to Digit. If customers will be on the hook for the tax liability there is indirectly a fee for using Digit.

Ethan Bloch says:

Hey David,

Thanks for writing about Digit.

Funny thing is your writing on the Bank Buffer (https://www.moneyunder30.com/bank-account-buffer) helped influence some of Digit’s math around the safe balance it calculates for a user 🙂 So thanks for that as well!

Regarding the security questions re: TD Bank totally hear you. That experience is shitty. Thankfully the most that will ever happen is 3 times. And for some of the banks that have this we’re working to ask them upfront so you don’t need to deal with it once you’re connected.