I’ve been using and recommending Digit for about a 6 months now. I was amazed at how quickly Digit money added up and I didn’t notice the missing $300 or so per month. I have Digit on a moderate aggressive setting, so it pulls semi regularly at $20 to $50 amounts throughout the month. I guess I shouldn’t have been surprised when Digit sent an email last week informing users it would place a $2.99 monthly service fee starting in June. Digit, after raking in $500,000,000 since their inception, saw they were sitting upon a Golden Goose. Since Digit never seemed to advertise and hopefully wasn’t selling my bank information, I assumed their revenue was built off the interest earned on the collective input of its users which seemed brilliant to me – I get a free service and a small incentive, while Digit’s employees do minimal work to keep me invested in a high interest account and split the profit. But then, Digit’s sales team killed their Golden Goose in a fit of miscalculated math I’m still trying to figure out.
TL;DR – don’t pay for service from Digit.
Let’s round to $3 for a monthly service fee. $3×12 = $36 per year, for the luxury of transferring my money from one account into the other. Before the service charge, Digit has an incentive that I’ve received interest over the course of quarterly periods, meaning I got a .20 bonus on whatever I’ve got in Digit four times a year. Digit announced it would also increase its saving bonus from .20 to .25 quarterly – a full 1% yearly rate – but that hasn’t been in place long enough to see the .05% increase for account holders.
To date, I’ve made about $2 in interest from Digit, probably less. Assuming that I’d make a whole $4 by the end of the year, I’ll have $32 less in my bank account than if I had done nothing once the service charge comes into play.
In order to break even using Digit once the service charge goes into effect, you need to have $3,600 in your account at all times (which is more than I have after 6 months of savings). That’s just to break even – where the service charge is covered by the interest. If you’d like to break even and then make the same 1% you would have under the old system? $7,200 in your Digit account, at all times, for a year.
I emailed Digit asking if they would be altering their 1% yearly plan and they emailed me back a four paragraph email and I’m quoting “Financial services in general is the worst, the whole industry is broken, and largely makes money by screwing their customers”. They didn’t answer my question, which I sent back again, asking if there was any intention of increasing the interest earned, which I doubt. Their FQA offered me links to Bank of America, Wells Fargo, and other large financial services that recently have engaged in fucking over their customer base. I will grant you this – Wells Fargo secretly screwed over a lot of people. Digit is different because it has openly informed me how it would like to screw me over, given me 100 days to get out of it, and assumes I won’t figure it out. Thank you Digit for the heads up.
If Digit collected 1% on the 500,000,000 (half a billion as they put it), they have earned $5,000,000 aka 5 million, per year. Sure, a fair amount goes back to its consumer base but that’s the (former) brilliance of Digit – my 1% cut was a few dollars. I didn’t sign up for Digit because of the 1% interest return – I didn’t even know about it until after my first 3 months – I signed up for the automatic savings. Digit is not my retirement account where I will come to depend on the compounding interest. Digit was building my “rainy day” funds. Digit could have kept all the interest from my account, and frankly I would have been just fine. My intentional use of Digit was to save and pull money as trips, events, and as life required. It was the buffer between my actual savings account and my checking. Digit grossly missed the mark on how its users view Digit assuming we will pay a monthly service charge.
If you’d like to have 1% savings account – I’d recommend opening an account with Ally bank. No service charge, while building credit and reputation with a bank that has no ATM fees. If you opt for the savings account, you are limited to 6 withdrawals/deposits per month so you’d need to likely do one or two large month deposits. Without Digit, I haven’t found an app that automatically saves money for me but I also haven’t looked that hard. I already use a system that “rolls up” my purchases to the even dollar amount, and transfers the difference into my savings.