When it comes to managing personal finances, many consumers stop subscribing to a ‘look after the pennies’ philosophy as soon as they are offered access to overdrafts and credit cards. It’s perhaps no surprise then that we’ve already seen numerous services which enable users to effortlessly transform their small change into something of greater value.
Acorns rounds up users’ purchases to the nearest dollar and automatically invests the difference in stocks of their choice, while Common Pence donates leftover change from London’s Oyster travel passes to charities. Now, Digit is a free service which automates user’s savings, moving small manageable amounts of money into a savings account every week.
Customers link Digit to their current account and the service uses algorithms to deduce personalized affordable savings opportunities. The service studies income and spending history to predict future cash-flow: It takes into consideration the consumer’s next payday, upcoming standing orders and their average daily outgoings. The service then proceeds to automatically withdraw funds and set small amounts of money aside — a few dollars here and there — placing them into a separate FDIC insured Digit account. The process is almost unnoticeable for the user, but the effect can be significant, and Digit keeps users informed with regular email or text updates, offering a no-overdraft guarantee. Users can access their money in one working day simply by sending a text message.
Digit is currently in Beta and operating only in the US. It makes money through the interest earned on customer’s savings — though it plans to offer users’ returns on their savings in the future. For the consumer, the inability to earn interest off these savings is likely to put many potential customers off — perhaps Digit could partner with non-profits, donating a portion of their revenue to good causes, to make the service more palatable and broaden its appeal?