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Qapital
Old 05-21-2018, 05:57 PM   #1
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Qapital

I'm curious if anyone knows anything about this app. My DD wants to use it to save money. The premise is that any time you make a debit transaction, the amount is rounded up and when she reaches her savings goal, that money is put in her savings account. She said her credit union savings doesn't earn interest. She has not been financially responsible so perhaps this would be good for her. I'm not sure about this kind of stuff--any thoughts?
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Old 05-21-2018, 06:51 PM   #2
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Personally, I don't think little 'gimmicks' like this lead to financial responsibility. Seems silly to me. In fact, I even think it likely reduces the road to responsibility, as now they have unloaded any thinking to this app.

And what will she do when she finds she has $25 in 'savings'? Spend it? That didn't solve anything.

In the old days, when people routinely paid cash for everything, some people would put their pocket change in a jug each day, and that was their 'savings'. Whoopee, < $1 a day.

I think a tool many people use to make savings automatic and not have to think about it, is some sort of payroll deduction. The money is gone before you can see it and spend it. You get used to living on the smaller amount. Get a raise? Put half of it to the payroll deduction. You get the benefit of more spending money, and more savings.

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Old 05-21-2018, 08:31 PM   #3
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Quote:
Originally Posted by PawPrint53 View Post
I'm curious if anyone knows anything about this app. My DD wants to use it to save money. The premise is that any time you make a debit transaction, the amount is rounded up and when she reaches her savings goal, that money is put in her savings account. She said her credit union savings doesn't earn interest. She has not been financially responsible so perhaps this would be good for her. I'm not sure about this kind of stuff--any thoughts?
Can you set the rounding amount? Rounding up to the nearest $10 or $100 could both boost savings and cut spending at the same time. If the rounding is merely up to the nearest dollar, it's more gimmick than practical IMO.
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Old 05-21-2018, 09:07 PM   #4
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There are several apps like this, (something like robinhood comes up often), I think the catch with this one is its tied to an online bank, so they are making money on you using their card.

Depending on how one is with money, I don't see any issue with this type of accounts. If people tend to have low balances, traditional accounts tend to lead to high fees for just banking... vs. online is free. (for example, if you chose a chase account that earned interest, you had to maintain at least $25k in assets or you got charged $10/month for an account.. CRAZY!!!)

This specific app seems to allow for smart rules to be built in if she uses those, she may be saving more than just pennies on a transaction. Like one example is you can set up rules such as if I spend less than $20/month on Starbucks per month, transfer the remaining to my savings.

Other than the app, she really is just online banking with this company that built an app to encourage you to save.
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Old 05-24-2018, 01:31 PM   #5
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I would say try it and see what you think, so you can help her. My son uses it. My daughter uses Digit. But both kids are also good at finances - with retirement and brokerage accounts.

I decided to try Digit and I actually like it. I use the "hidden" money for travel, so does my daughter. In fact she is in Paris as we speak because she saved using Digit. I am happy for her because her travels will not go on a credit card.
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Old 05-27-2018, 01:58 PM   #6
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Kayak says I can get a round-trip airfare from Chicago to Paris for about $1000. How long does it take for Digit to built up this much "hidden" money?
Sounds as likely as Google paying $96/hr to surf the internet.
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Old 05-27-2018, 02:38 PM   #7
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Kayak says I can get a round-trip airfare from Chicago to Paris for about $1000. How long does it take for Digit to built up this much "hidden" money?
Sounds as likely as Google paying $96/hr to surf the internet.
Maybe but I just did a quick search and found airfare PLUS hotel from Chicago to Paris for under $1000 so like all things it just depends on how flexible and determined you are.
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Old 05-27-2018, 03:04 PM   #8
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I think it's an incremental way to save. We still toss change into jars. Back when we actually used cash regularly, it added up a lot faster. When we cashed out in 2016 after perhaps a decade of tossing, we had two 1 gallon jars full and it was several hundred dollars. That paid for a three day weekend at nice hotel and meals. About a decade earlier, did something similar.

Yeah, it's not a 401K, but an app that digitally does the coin tossing for you could very well do same as above, if you can link it to a free account (student,etc) and earn even lousy interest, it's better than the jar. Just allow it time to grow. I'm in the "give it a try" camp.
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Old 05-28-2018, 10:22 AM   #9
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Quote:
Originally Posted by PawPrint53 View Post
I'm curious if anyone knows anything about this app. My DD wants to use it to save money. The premise is that any time you make a debit transaction, the amount is rounded up and when she reaches her savings goal, that money is put in her savings account. She said her credit union savings doesn't earn interest. She has not been financially responsible so perhaps this would be good for her. I'm not sure about this kind of stuff--any thoughts?

Far better would be for her to open an Ally bank account, and set an automatic monthly transfer from her account to Ally right after her pay goes in. (ally pays ~ 1.5% interest on a SAVINGS account).

This way, the money is out of her account before she spends it, and she earns interest on it.



Her problem is she wants to spend money...... you cannot save if you spend it all (or more).
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Old 06-01-2018, 12:11 PM   #10
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Kayak says I can get a round-trip airfare from Chicago to Paris for about $1000. How long does it take for Digit to built up this much "hidden" money?
Sounds as likely as Google paying $96/hr to surf the internet.
Sorry for the late reply - just got a new grandson!

Her round trip was ~$500. But she saved $4-5k last year using digit. It uses analytics on your balance and deposits and takes money out based on math in odd amounts and days. If you want to save less, you can tone it down. She already does the other normal types of savings we all do - into a savings for emergencies, brokerage and IRA account. This is just for fun.
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