Is the Automated Neobank Right for You?
In the span of two and a half years self-described “bad saver” Matt Wiley managed to save $4,300 without thinking about it.
“It feels weird saying ‘I saved,’ because I really didn’t do anything,” he said.
Despite being an editor at The Penny Hoarder at the time, Wiley admitted he’d never been good at putting money away.
“I don’t have a good reason for why it has been difficult, other than I’ve never been good at forcing myself to put money aside to not touch.”
In early 2015, Wiley heard about a money app called Digit from one of his wife’s friends, who was already using it to build savings. Since its early days as the automated savings app that turned Wiley into a bonafide saver, Digit has expanded a lot to cover more than just savings needs.
How did Digit help this bad saver stash away more than $4,000 and can it do the same for you? In our Digit app review, we’ll cover everything the app has to offer to help you save, invest and manage your money all in one place — with, let’s be honest, the least amount of work possible.
Digit App Review: Accounts
In this 2022 review, we’re looking at the app’s full suite of features, including spending and savings accounts, investing, and money management tools.
When you sign up for Digit, you can choose just its saving feature, or you can open a Digit Direct account to access savings, checking and investing with automated money management features.
Digit Direct Checking
Best for Automated Money Management
- AI budgeting for savings and bills
- Automated savings
- Fee-free low-balance protection
Digit Direct is a smart bank account that automatically sets aside money for your bills, saves for your goals based on what you can spare, invests for your future and shows you what’s available to spend. The account is all online and backed by MetaBank. You’ll get a Visa debit card for everyday spending, and the app puts your bill cache in its own checking account you use to pay bills online.
Digit Direct Checking
Fee-free at 55,000+ Allpoint ATMs
Automated budgeting for savings, investing and bills
More Information About the Digit Direct Checking Account
Direct is Digit’s deposit account backed and FDIC-insured by MetaBank.
It takes the work out of managing your money by automatically setting aside money to pay your upcoming bills, working toward your savings goals and investing, then telling you your “available to spend” amount, so you don’t have to wonder whether you can afford the second latte you’re about to order.
You just tell Digit how much a bill is and when it’s due, and the app automatically moves money from your spending balance into your bills balance in small amounts throughout the month.
Digit doesn’t offer automatic bill pay within the app, but you can use your Digit account or debit card number to set up autopay with your biller. Through AI (and tweaks from you), Digit recognizes the payee as bills are paid, and it deducts the amount from the associated bill balance.
A Digit Direct account comes with a Visa debit card you can use for purchases and for ATM withdrawals. ATMs are free in the AllPoint network (which you can find at popular retail locations like CVS, Walgreens and Target), and you’ll pay $2.50 plus the ATM owner’s fee to use an out-of-network ATM.
Digit also uses your Direct balance to set money aside for savings goals and retirement investments.
How Digit Helps You Budget
To make sure you only save money when it fits your budget, you can set a minimum balance for your spending account. If you dip below that balance, Digit’s “overdraft protection” will take money from your savings account and replenish your spending account without charging an overdraft fee. (Note that the Direct account doesn’t include actual overdraft protection; if you try to make a purchase without the available funds in your account, it’ll be declined.)
You can fund a Direct account with deposits from a connected bank account and direct deposits but you can’t deposit cash.
You can use a Digit Direct account for $9.99 per month or $95 a year (20% savings). As the app transitions to this new offering, existing Digit savings customers can switch to the Direct account and continue paying $5 per month for their first six months.
Best for Automated Short-Term Savings
- AI-driven savings you can afford
- Open-ended or targeted goal amounts
- No withdrawal limits or balance requirements
Your Digit Savings balance is money set aside for your savings goals. You can create as many goals as you want for things like an emergency fund, car repairs, holiday shopping and vacation. Every day, Digit analyzes your checking account balance to determine how much you can afford to spare and stashes it in your goals, so you save money automatically without feeling the pinch.
Automated savings driven by AI
More Information About Saving With Digit
Saving is Digit’s bread and butter. The app originated as an automatic savings app before bringing banking onto the same platform.
Unlike many savings apps, Digit also doesn’t force you to set an end target for your savings goals. You can add a target amount and end date for every goal, each optional; or you can leave them open-ended, like Wiley did, and save what you can.
You can set a maximum daily saving amount and a “safe saving level” — a minimum checking account balance — to make sure Digit doesn’t get more zealous with savings than you’re comfortable with.
You can use Digit just for the savings feature, connected to a third-party bank account, for $5 a month. Or it’s included if you open a Digit Direct account for $9.99 per month or $95 per year.
What’s Different About Digit App for Savings
What’s special about how Digit helps you save money is that it doesn’t rely on you to budget and commit to a strict savings schedule that might not always work for you. Instead, it looks at the income and spending habits in your account and adjusts your savings amount every day.
“I was intrigued by the idea of an algorithm pulling money out of my account in ways I wouldn’t notice,” Wiley said. “I was working my first job out of college and basically living paycheck to paycheck, so I definitely hadn’t been putting anything aside. It seemed worth a try.”
If you use a Digit Direct account for your spending, the app will also see the bills you have coming up and set money aside for those before calculating how much you can afford to save.
Digit Investments and Retirement
Best for Automated Investing
- Long-term savings goals
- Traditional and Roth IRAs
- AI-driven investing you can afford
Digit Investments and Retirement are the app’s long-term savings options. An investment account works the same way as your savings account — automated contributions based on what your account can afford — but the money gets invested into an IRA (for retirement) or a portfolio of ETFs (for long-term savings).
Digit Investments and Retirement
Automated contributions based on what you can spare
More Information About Investing With Digit
Investing is a natural extension of Digit’s short-term savings features, and the options work similarly in the app.
You can set up a Digit Investments account with buckets dedicated to your long-term savings goals, like building wealth, buying a home or starting a family.
Digit asks easy-to-understand questions to determine your risk tolerance and recommends a conservative, moderate or aggressive portfolio for you. Your money is invested in exchange-traded funds (ETFs) to grow while you work toward your goal.
Contributions to Digit Investments work like its savings goals. It’ll analyze your spending balance and make safe daily investments to your portfolio.
You can also set up a Traditional or Roth IRA to save for retirement tax free.
Because of the way retirement accounts are regulated, Digit only makes investments monthly, and you face the same contribution limits and withdrawal restrictions as with any IRA. It does, however, still set aside the money regularly from your spending balance according to the same saving rules.
Unlike more robust investment apps, Digit doesn’t facilitate individual stock trading. You can’t choose which stocks or funds your money goes into, just the general type of portfolio you want Digit to build for you, but you can see which ETFs your money is invested in.
There’s no way to open a Digit Investment or Retirement account on its own; the option is included with a Digit Direct account for $9.99 per month or $95 per year.
Other Digit Perks
Digit started as a savings app and added banking and investing in September 2021.
It doesn’t currently offer other financial products, like loans, credit cards or insurance, but it wouldn’t surprise us to see those added in the future. The company was acquired in late 2021 by Oportun, a loan company focused on affordable loans and credit cards.
Credit Card Bills
One interesting perk included with Digit’s bill management feature is credit card balance management.
When you set up a credit card bill in Digit, you have the option to link your credit card account through Plaid (the industry-standard platform that connects money apps with bank accounts).
If you do that, you can see your credit card balance and transaction right in the Digit app. The app will use your credit card’s current balance, statement balance or minimum payment — your choice — to determine how much to set aside for the bill that month.
This feature solves two major problems that exist with other money apps:
- Most banking apps don’t let you see your credit card balance alongside your bank balance, which leaves vital information out of so-called all-in-one platforms.
- Many budgeting apps ignore the reality that credit card bills fluctuate from month-to-month.
This feature, along with its flexible savings and investing features and “available-to-spend” balance, help people manage money by accounting for the real ways we interact with money, including things like irregular income and unexpected bills.
In a blatant deviation from competitors, Digit charges a flat service fee to use the app. You have two options:
- Savings only: $5 per month.
- Bank account with savings, investing and budgeting: $9.99 per month or $95 per year.
Your first 30 days with either option are free.
For Wiley, the amount he paid to use the app was worth the $4,300 he saved without thinking about it or ever panicking about his bank balance.
“Way less than Netflix,” he said.
Digit doesn’t charge any other fees associated with some bank accounts, like overdraft fees or minimum balance fees. ATMs are free as long as you use an AllPoint network machine; otherwise you’ll pay a $2.50 fee plus anything the ATM owner charges.
You won’t pay any management or maintenance fees to Digit or its partner broker-dealer, DriveWealth, for Investment or Retirement accounts.
The money in your investment accounts gets invested into ETFs, which usually come with third-party fees that come out of your account balance. Those fees (referred to as an expense ratio) tend to be well below 0.5%, and you can find them by looking at your portfolio’s ETFs in the app.
Digit Customer Experience
When you open an online bank account, the quality of the app is key. It needs to be intuitive and easy to use. Digit checks both of those boxes.
The app is rated 4.7 out of 5 in the App Store and 4.6 out of 5 in Google Play, with hundreds of thousands of reviews.
Like any online bank account, Digit doesn’t come with physical locations where you can connect with a teller or customer service rep in person. But it’s online customer service is there for you. An online help center answers any general question you could have about using the app, and you can send an email if you have a question about your own account for a quick response.
Worried about turning your finances over to AI? Don’t be. The app gives you plenty of control to set boundaries on where and when it can move your money — and, anyway, letting it do its thing works.
“I’m definitely a fan of passive saving,” he said. “For people like me (he’s talking about all the Bad Savers out there), not having to think about it is the best way to save.”
Is Digit Right for You?
Digit is for folks who want a money management solution that means they don’t have to think about managing money.
If you’ve struggled to set aside money, stay on top of your bills, start saving money for retirement or find success with a typical budget, this automated account could be for you.
Digit doesn’t offer joint bank accounts, so this isn’t a good option if you want to share an account with another user. It also doesn’t offer a way to deposit cash, so it’s not the best bank account for you if you’re mostly paid in cash.
Pros and Cons About Digit
Here are the biggest benefits and drawbacks of using Digit for savings, banking, investing and money management.
- Automated savings based on what you can afford.
- Automated investing and retirement savings based on what you can afford.
- Safe-to-spend budgeting for bill payments.
- Visibility and smart budgeting for credit card balances.
- No overdraft fees.
- Fee-free low-balance protection.
- No account minimums for checking, savings or investment accounts.
- Taxable investments and IRAs in one place.
- No free version. Pay $5 per month for savings or $9.99 per month for the full suite.
- No cash deposits.
- No joint bank accounts.
- No credit cards or loans.
Frequently Asked Questions (FAQs) About Digit
Here are our answers to some commonly asked questions to help you decide whether Digit is the right place to manage your money.
Digit Direct is a deposit account backed by MetaBank that you can use for checking, savings, investing and money management. You manage your finances all from one account in the Digit app, though your money is split on the back end among deposit accounts for spending, bills and savings. Digit is not a bank; it’s a financial technology company.
Yep! Digit is a San Francisco-based company founded in 2013 by business and finance expert Ethan Bloch. It raised more than $60 million from venture capital firms over the years and was acquired by loan company Oportun in late 2021.
Only you can decide whether the value of the app is worth your $5 or $10 a month. In exchange for that fee, you get a lot of peace of mind about your finances: knowing your bills will be paid, your savings is growing, your investments are on track and you can spend from your account without worry. Plenty of online bank accounts come with no monthly fee, if you don’t need Digit’s automated support.
What Are Pros and Cons of the Digit App?
The main benefit of using Digit for banking and saving money is automation. The app uses intelligent tech most banking and budgeting apps don’t have to safely set aside money and build your nest egg, while staying on top of your current bills and spending. Its main drawback for most users is the monthly fee, which most competitor online banks don’t charge.
Does Digit Steal Your Money?
Absolutely not! When you use the savings feature, you can pull your balance from the Digit account back into your linked bank account anytime. If you use a Direct account, that’s a bank account in your name that you have total access to and control over. All of your money in Digit deposit accounts is FDIC-insured up to $250,000 (standard for bank accounts), and your investment accounts are SIPC-insured.
Dana Sitar is a Certified Educator in Personal Finance® who’s written about work and money for publications including Forbes, The New York Times, CNBC, The Motley Fool and a column for Inc. Magazine. Former The Penny Hoarder staffer Carson Kohler contributed reporting to this story.