For nearly two years now, I’ve been telling everyone that they should sign up for Digit. Digit transfers a little money every day or few days into a separate savings account. The general idea is that the money is out of sight and out of mind. I thought that was a perfect way to grow an emergency fund, save for the holidays, and even execute some clever saving hacks.
Best of all, Digit was free. That’s all changing according to an email I received yesterday:
Today we have a couple of big announcements to make.
As Digit becomes a more important part of our customers’ financial lives, we’ve decided to make a conscious decision about how we want to make money: We work for you, and you pay us. It should be that straightforward. Too many financial services complicate things by making money doing things not in the best interest of their customers. Charging for Digit will allow us to support our service while making sure we always do what’s right for the customer.
A monthly subscription will cost $2.99. For all existing users, Digit will remain free for the next 100 days.
We are also significantly increasing the Digit Savings Bonus. All customers will now earn a 1% Savings Bonus (up from 0.20%). With the recent introduction of Goalmojis, customers are saving more than ever, and we want to make sure you’re earning real rewards for saving with Digit.
Thank you for being an early user, believer and fan. You have helped sparked the savings revolution. We promise to continue building products that make your financial life easier and better.
Why Was Digit Free to Begin With?
My understanding is that Digit was free because they weren’t paying interest (at least at first). Later they added the savings bonus that was mentioned in the email. The percentage rates are annual, so if you had a $1000 in the past you’d get $2… parsed out in 50 cent increments every few months. Obviously, it’s not a lot of interest and I presumed that, like banks, this organization could pool millions and millions of dollars and get much better interest rate… a rate that’s good enough to pay employees at that scale.
It seems that things have changed, or that Digit might want to expand and do more.
Is Digit Worth $35 a Year?
Only you can decide that. I had some readers who said that they set up automatic transfers with their bank to another savings account and it accomplishes the same thing. Other people have said that they wouldn’t have saved anything simply because they had too many other life tasks to get done.
I’m not particularly thrilled by definition of a Savings Bonus. It feels like they should just pay interest like a bank. The only difference I see is that this Savings Bonus is only paid out a few times a year. If a customer leaves just before the Saving Bonus is paid they would presumably lose a couple months worth of interest.
In general, you’d have to have around $3600 for the 1% Saving Bonus to offset the fees. That’s a pretty sizeable chunk of money for some people.
“Have You Met My Friend Dobot?”
While they both squirrel away money, they do it in different ways. Digit saves money into one place which is why I liked it for a general emergency fund. Dobot pushes you to save money for a certain thing.
For example, I wanted to save for this 65″ OLED television that is currently priced around $2500. I told Dobot that I wanted to save $2000 by Black Friday (finger’s crossed for a deal). I have $955 saved now.
You can have multiple goals with Dobot. So I could simply just create one called “emergency fund” with a goal of having $2000 in that by the end of the year. Boom, instant Digit!
It seems that Digit was looking to be like Dobot anyway by offering Goalmojis (which I never got around to using).
It was fun while it lasted Digit, but it seems that I’m going to have to move on. You were doing what is right for me before and now you not. No hard feelings. I’d say that we can still be friends, but you’ll have to drop your monthly friend fee for that to work.
You’ll be fine without me. You’ve probably got a few hundred thousand or a million others to keep you company. I know that many others will leave like me, but I have to think that a few will forget the changing rules or be unwilling to change. In either event, you should make out quite well.
Don’t worry about me. Dobot is treating me well. I wish you the best of luck.