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When the popular savings app Digit announced in early April they were going to start charging a monthly subscription of $2.99, its users were in an uproar. Money nerds and existing customers alike sent out a barrage of "How could they?!" tweets and hate on online forums, threatening to close out their accounts immediately.
I get why this threw people into a tizzy. Asking people to pay for something they’re used to getting for free leaves a bad taste in their mouths. With all the free money-saving apps out there, there’s little incentive to pony up dough for a monthly subscription.And while I chose to remain silent online up until now, I’ve decided to remain loyal and keep my account with them. Here’s why I decided not to jump ship and stick with Digit:
Sure, there are plenty of money-saving apps that don’t charge a thing, and investment apps such as Acorns and Stash charge less ($1.25 and $1.00 a month, respectively, for balances under $5,000).To offer some perspective, three dollars is barely enough to cover the cost of a latte and less than the price of avocado toast, the newest whipping boy for frivolous spending among millennials. It barely covers the cost of parking for a few hours in a lot in L.A., or a basket of fries at your favorite greasy spoon. You probably won’t notice it.
And let’s think about the times we’ve been dinged with those pesky fees from big banks. The average overdraft fee is $33.04, which is almost as much as sticking with Digit for a year;the average cost for taking money out of an out-of-network ATM is $4.57, which is higher than a month’s subscription for Digit.
While we might shake a proverbial fist when we’re charged a bank fee, just like with taxes and speeding tickets, we accept these fees as a harsh part of life. But if we are asked to pay for a service which helps us save, we get upset. Personally, I’ll happily spend a little on a tool that helps me achieve my bigger financial goals.
Since I first signed up for Digit in the spring of 2016, I’ve saved nearly $7,000. If you break it down by month, that’s $450 a month or $5,400 a year. Right now I have over $3,000, and just received my quarterly bonus of $7.80 (score!). It’s more than I would’ve saved if I didn’t have the app, so for me the $36 a year pays for itself.While Digit didn’t add any new features when they introduced their fee, they upped their savings bonus from .20 percent to 1.0 percent, which is paid out every three months. This is more than the .06 percent average interest rate you’d get if you left your money sitting in a traditional bank account. To break even with Digit’s subscription fee, you’d have to have $3,600 in your account. And while the average Digit user saves anywhere from $80 to $170 a month, which adds up to $960 to $2,040 a year, it may still be worth your while to pony up $36 each year.
There’s certainly no dearth of financial apps, but none that offers such simple savings such as Digit. And while I use and love Qapital, which also offers clever ways to save, Digit is the only one that I know of that uses an algorithm to help you save. Plus, I look forward to getting my daily text of the balance in my linked checking account and can check what the most recent transfers were. And they’ve also released Goalmojis, which lets you set up savings goals and assign an emoji of your choice to them. That’s 10 cents a day to help me keep tabs on my bank account and spending, and it’s totally worth it.
I think we’re really fortunate in the U.S. to have so many apps and tools to choose from. My pals in other parts of the world, even in Canada, don’t have access to a fraction of the apps and tools Americans have. (Can you imagine living without Venmo?) And of course, for a business to survive it needs to make money. While Digit has been funded primarily by venture capital and the modest amount from interest from deposits, it needed to find a way to make it rain. It’s providing a service that I value and I want to do my part to support cool apps that help people improve their finances.
The Digit team was willing to go out on a limb and be transparent by letting its users know that it made the conscious decision not to sell its user data or make money by recommending products. It vowed to always do what’s best for its customers, and in order to make some money they decided to start charging. It was a bold move and I appreciated the candor.Ten cents a day may not be worth it for everyone, but I’ve found a lot of value in being a Digit customer. As someone who doesn’t fork over money too easily for subscription services (I only have Netflix, and went halfsies with a friend on the $12 monthly fee), I feel that being a Digit customer is well worth it.
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