Qapital review: Smart savings app for budget beginners

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Qapital review: Smart savings app for budget beginners

Saving money is important—but few are truly putting away enough. In fact, an astonishing 47% of Americans couldn’t afford an unexpected $400 expense. Although some people don’t save because they are living paycheck-to-paycheck, many others know they should save but aren’t, because it isn’t easy.

Apps like Qapital are here to change that. Qapital automatically saves money for you. You set some savings rules (more on those later), and Qapital does the rest. Your money is automatically transferred into a savings account. It sounds simple, and it is.

It turns out that simplicity is the biggest advantage of Qapital—and also its biggest weakness. Let’s explore how Qapital saves money and see if it’s right for you.

How Qapital works

Qapital works by automatically transferring money from your checking account into a separate Wells Fargo account run by Qapital. You can withdraw your money for free at any time, although transferring between your accounts typically takes a few days. You won’t earn any interest on the money in your Qapital account, but your funds are FDIC insured.

Got a low checking balance? Never fear. Qapital automatically stops transfers when your balance falls below $100, preventing pesky overdraft fees. (And wouldn’t that be ironic, paying overdraft fees because you were saving too much money.)

Setup is easy. You can create a username or sign up with Facebook. Then you link your checking account and viola, you’re ready to save automatically.

Ways to save with Qaptial

What makes Qapital shine is its flexibility. There are a ludicrous amount of ways to save.

There’s the round-up rule, which rounds-up everything you buy to the next $2. So, if you purchase a $10.50 lunch, $1.50 is added to your Qapital account. This is my personal favorite, because it forces you to save every time you spend.

There’s also the 52-week rule, where you save $1 in the first week, $2 in the second week, and so on until you save $52 in the last week. This doesn’t feel like that much, but it adds up to a $1,378. Not bad. I like how this rule makes you save more as time goes on.

You can also have fun and save in some pretty unusual ways. You can save every time you post to Instagram. You can save every time you tweet. You can save every time you meet your FitBit or Apple HealthKit fitness goals. You can even save whenever you add a song to a Spotify playlist. You’re in full control since you choose how much to save for each action. Since it’s all automatic, it’s painless and, when I used it I was shocked how fast I was saving money.

The pros of Qaptial

Qapital has one big thing going for it—it makes saving easy. After activating the round-up rule, I was saving every time I used my credit card. This small tax on my purchases forced me to save, even when I was spending money. And the unorthodox savings rules, like saving money when you post on Instagram or when you reach your fitness goals, really allows you to make saving approachable and almost fun.

The cons of Qapital

There are two downsides to Qapital. The first is that you don’t earn interest on your Qapital savings. Given that interest rates are near historic lows, I don’t consider this to be much of a problem. But as the Fed continues to raise rates, this business model will get increasingly bad for consumers—and increasingly good for Qapital.

The other argument against Qapital is that it is too simple. A true comprehensive savings plan should generally take advantage of the tax savings of IRAs or, at least, include investments in index funds and bonds. There are a host of new apps and tech services like Acorns, Wealthfront and Betterment, aimed at helping you explore these options. Qapital, unlike some other apps which automatically invest in the markets, simply puts your savings in an account where they sit around.

The verdict

Some people look at Qapital and they see an app that falls short. There’s no interest, and the frivolous ways to save turn off "serious" finance types. But Qapital isn’t for someone who already has a healthy IRA and thousands of dollars in the bank.

Qapital is trying to make saving fun. It’s a gateway drug to responsible saving, and, viewed from that angle, Qapital is a tremendous success. Qapital isn’t the only way to save, but it’s a great way to get started.