Automated savings app Digit to begin charging subscription fee

Last week, Digit, the automated savings app that has grown to be the darling of many lazy personal finance bloggers like me, announced that they will no longer offer their service for free. If you are one of my frequent readers, you know that I have been using Digit for over a year and a half and have set aside roughly $7,500.00 without ever thinking twice about it. My love affair with Digit has been well documented and I have appreciated my time using their service, but unfortunately, it’s time for me to say goodbye. In an email to their user base last week, they announced a Digit subscription fee, a transparent monthly charge to compensate them for the services that they offer:

Today we have a couple of big announcements to make.

As Digit becomes a more important part of our customers’ financial lives, we’ve decided to make a conscious decision about how we want to make money: We work for you, and you pay us. It should be that straightforward. Too many financial services complicate things by making money doing things not in the best interest of their customers. Charging for Digit will allow us to support our service while making sure we always do what’s right for the customer.

A monthly subscription will cost $2.99. For all existing users, Digit will remain free for the next 100 days.

We are also significantly increasing the Digit Savings Bonus. All customers will now earn a 1% Savings Bonus (up from 0.20%). With the recent introduction of Goalmojis, customers are saving more than ever, and we want to make sure you’re earning real rewards for saving with Digit.

Thank you for being an early user, believer and fan. You have helped sparked the savings revolution. We promise to continue building products that make your financial life easier and better.

Feel free to reach out if you have any questions.

-Team Digit

How much does Digit charge?

The Digit subscription fee is $2.99 per month. Existing accounts will continue without fees until mid-July, 2017.

What are Digit Savings Bonuses?

Digit Savings Bonuses are a 1% annual savings bonus that is paid out based on your average total account balance over the past three months. The bonuses are paid quarterly, but the 1% is annual, so you will receive a bonus of 0.25% every three months. The previous Digit Savings Bonus was 0.2% annually.

When do you break even with Digit?

The Digit subscription fee comes out to $35.88 per year. To receive $35.88 per year in Digit bonuses, you would need an average account balance of $3,588.00. This would make your quarterly subscription payment of $8.97 equal to a quarterly savings bonus payment of $8.97 (0.0025 x $3,588.00).

Why I’m deleting my Digit account

I honestly don’t have a lot of bad things to say about Digit. It has been a great tool for me to automate my savings over time and pull money out of my checking account without having to think about overdraft fees or intentionally saving. However, I have used it as a tool to temporarily move money from my checking account, which I later transfer into my brokerage account and put into either a Vanguard Total Stock Market Index fund, my Wealthfront account, or my Lending Club account. The requirement of over $3,500 just to break even, with very little earning potential for anything beyond that balance just doesn’t make as much a sense for me as manually transferring money over to higher growth potential accounts. While this will require slightly more monitoring and manual transferring, I believe that the earning potential will make it worthwhile.

How do you delete your Digit account?

Digit makes it very easy (just like everything else they do) to close your account. You can go to digit.co/close-account and select a reason for shutting down your account, then complete the steps.

 

Today, I say a bittersweet goodbye to Digit. I have no hard feelings and will still recommend it to anyone that it makes sense for. Until we meet again, old friend…

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