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Digit: Save money without thinking about it
- noja 11y agoBeware: I didn't think about it, and I didn't save any money.
- theodorton 11y agoMy bank has this feature. It basically rounds up to the nearest $5 when I use my card and put that money in a separate account. Was really useful and nice to have some spare fun-money every month, but I ended up draining the account every time it reached ~$150. After I started using YNAB it was just too much overhead, now I consciously save towards my savings goals when paycheck arrives.
- yitchelle 11y agoPerhaps you can name and fame this bank. Sounds like a great feature to incentive more savings. We should start thinking in terms of investing rather than in terms of savings.
- chrisdroukas 11y agoBank of America has a similar program called "Keep the Change". https://www.bankofamerica.com/deposits/manage/keep-the-change.go https://www.bankofamerica.com/deposits/manage/keep-the-chang...
- driverdan 11y agoToo bad it's BoA.
- hkmurakami 11y agoI guess automated 401k payroll deductions is the ultimate form of this sort of philosophy.
- noondip 11y agoNot quite - a 401k could either lower your taxable income now by accepting pre-tax contributions, or offer you tax-free returns on your investment in the case of a Roth. This savings service definitely does neither.
- kchoudhu 11y agoI remember when this came up on my Facebook feed a year or so ago. I shat all over it because they were essentially taking money in, calling it "saving" and then not paying out any interest. Have they fixed that? Sort of. They now pay a $0.05 "savings bonus" for every $100 you hold with them for 3 months, for an annualized interest rate of 0.2%. Needless to say, the savings bonus won't go up when interest rates go up: it is a "savings bonus" and not an interest rate, after all. Let's call this what this is: a gimmicky savings account with a crappy APY. Call me when their savings algorithm is mated with an automatic investment in my choice of low cost mutual funds.
- reustle 11y agoIsn't that what Acorns does? http://acorns.com/ http://acorns.com/
- kchoudhu 11y agoI wasn't aware of them -- but yes, it is. 0.25% in fees is kind of rich for a pure passthrough service, though.
- easytiger 11y agoanything charged as a percentage is a scam; and yet many industries are fully based on it (e.g. property). There is no justification in almost all services to charge a percentage where no risk is assumed.
- pc86 11y agoIt's about ability to pay. Of course it's extremely unlikely for a realtor to do $30k worth of work to sell a $1 million house. But they're also going to work to sell that $60k house and they will probably put in more than $1,800 worth of their time. Having a flat fee would make it practically impossible for the poor or even lower middle class to sell their homes without having to write a check for the privilege.
- jellicle 11y agoI don't see anything in the FAQ about Digit being FDIC-insured so that when they go bankrupt or get hacked, I'll have some chance of getting my money back. This: https://help.digit.co/hc/en-us/articles/203931308-What-happens-to-my-funds-if-Digit-goes-out-of-business- https://help.digit.co/hc/en-us/articles/203931308-What-happe... might be the least reassuring response possible to that question. And it's explicitly contradicted by this response: https://help.digit.co/hc/en-us/articles/217382378-How-does-Digit-make-money- https://help.digit.co/hc/en-us/articles/217382378-How-does-D... > Today, we make money like a traditional bank does, by accruing interest on the savings we hold for you. If Digit is making interest on (my) money, then said funds are probably in a commercial bank account in Digit's name somewhere. If said funds are in a commercial bank account in Digit's name somewhere, bankruptcy is going to FREEZE those funds. They aren't going to be transferred back to me. And Digit's investors are going to have every reason to argue that said funds SHOULD be available to pay off Digit's debts. Don't use this.
- kchoudhu 11y agoThey're probably striping cash across multiple banks in order to maximize FDIC coverage. If the money is lost from the backend, they'll be made whole. The rest of their business model reeks, though.
- deleted 11y ago[deleted]
- Johnie 11y agoDigit takes advantage of FDIC pass through insurance. Your money is separate from Digit's money. If Digit goes bankrupt, your money still belongs to you, not to Digit's investors. Disclaimer: I don't work for Digit, but have been doing a lot of research in this area.
- neffy 11y agoIndeed. Plus a traditional bank makes money from the interest paid on its loans, and then pays interest on its savings.
- MichaelBurge 11y agoWhy not just leave it in the checking account and not spend it? Actually, who is so irresponsible with their money that it's a wise choice to let some random shell company periodically suck out an indeterminate amount of money that they think you won't notice, and promise to give back if you ask them for it? Reminds me of those Wall Street executives that give women access to their bank accounts so they can boss them around with it. They'll give him an 'allowance' to pay their bills or a 'bonus' if he obeys her. I think the term is 'Financial Domination'.
- a_imho 11y agocomplete bonkers. What is the added value? Sure, here is my bank account and my financial history, please go have your way with it.
- LukeB_UK 11y agoIf you're responding to the part about the financial domination, those people usually submit to it because they find it sexually gratifying.
- shostack 11y agoKnowing someone in a relationship where they are a significantly higher earner than their gf, I've had an interesting conversation with them about what you refer to as "financial domination." From their standpoint, it makes sense to a degree. If they see their relationship moving forward to the point they get married, he realistically earns enough where she would not have to work and eventually be a stay at home mom. That's a huge luxury in and of itself these days for a young couple. However it would probably be more unfair if she was only given money when she asked permission for it. So agreeing on some sort of "salary" (or "allowance" as you called it) of money that she can spend on herself or save as she sees fit, no questions asked, can actually be freeing in many ways. I think many people, were they to have the option of not having to work and being given regular spending money would take it in a heartbeat. Not saying it is right or wrong, just that it isn't a black and white issue, and at least in this case, they both are having open discussions about it.
- yitchelle 11y agoAre these folks just redressing "auto-scheduled direct transfer to a savings account" in new emperor's clothing?
- matt_wulfeck 11y ago> Every few days, Digit checks your spending habits and removes a few dollars from your checking account if you can afford it. Is this what we've come to with our personal economy? The need for an app to withdraw money for us because we're either too lazy or too scared to setup automated withdrawals or proper budgets? And its not even invested. It's just shuffled around.
- kardos 11y ago> Is this what we've come to with our personal economy? No, we have not. Nobody is going to use this service.
- randomgyatwork 11y agoLikely the sense of saving has been erased from most peoples minds.
- IshKebab 11y agoInteresting idea, but unless you are living paycheck-to-paycheck (and presumably if you have any savings at all you aren't), why not just set up a standing order and adjust it if it turns out to be too high or low. Takes about 20 seconds.
- isomorph 11y agothis is what i do
- joolze 11y ago“For those of you who just can’t be trusted to not blow your allowance. It's not condescending, we swear.” “Do you keep track of your finances? That’s great because we’ll be withdrawing random amounts into your 'piggy bank' at random times … and maybe even our 'piggy bank' once or twice ;)” “Do you work for Yelp! and still find yourself blowing all your money on luxury whiskeys and restaurant food? Let us help you with your backup plan before getting yourself fired for calling your boss a spoiled brat, you spoiled brat.” “Does being an adult with a bank account make you angry? Would you prefer it if mommy took care of your money for you? We’re here to help!” “Do you accidentally blast 300$ on open bar tabs every Friday night and need that to stop? Give us access to your bank account so we can save you from yourself.” “Isn’t having so much money that you don’t care if 50$ just disappears for no reason every week just great? Let us help you pretend to be productive with that money by placing it in a negative interest rate savings account!” "Are you incapable of stopping until it's all gone? We're alcoholics, ahem, compulsive spenders as well. Give the bottle back, Father Jack." "Do things like 'stocks' and 'bonds' sound scary? Do you think 'gold' and 'silver' are pointless fads? Wish money would stop getting highbrow ideas? We do to, why make your money work for you when you can send it to work for us? Errr... I mean, why make your money work, when you can send it on a tropical vacation?!"
- anexprogrammer 11y agoThis would be cute if it was someone's Show HN doing something clever with banking API into their own savings account. Apart from that I genuinely don't see the appeal. Oh, and they're using the longest image alt text I ever saw - Each blog post is duplicated into the alt text.
- avalexandrov 11y agoI don't see the appeal of this. Can't you just decide that (for example) you're going to spend only 75% of your monthly income and save the other 25%? At least that's what I do.
- stuxnet79 11y agoClearly some people have zero self control. I've heard of people managing to "save" that 25% but afterwards they can't control themselves enough to not dip into it when their current reserves are gone.
- dmr__ 11y agoWow - saving for suckas
- stevoski 11y agoMy bank, (EVO, a Spanish bank) does something similar-ish. Once a month they move any balance in my current account above 3,000 EUR into a savings account. Yes there is interest, and yes it is minimal. I much prefer this approach than having a separate company getting involved.
- Cartwright2 11y agoOne man's "saving money" is another man's "robbery". Set up a scheduled transfer from your checking account to your own savings account if you can't manage your own money. Don't encourage these kind of rip-off merchants.
- douche 11y agoI dunno, I just got my employer to split my paycheck so part of it goes into my savings account. Don't have to think about it, and it works pretty well for me to then have my Roth IRA pull from that account. Assuming I actually live long enough to retire, I should wind up with around a million dollars. Hopefully inflation or the market doesn't wipe that out, but I don't have much control over that.
- theandrewbailey 11y agoI noticed that my employer had a few empty account numbers on the direct deposit form. So I had a few hundred per month directed into a savings account, on top of a 10% 401k deduction. I've been thinking about upping that, but I'm still saving without consciously choosing to do so for every paycheck.
- piptastic 11y agoBased on the comments, HN is obviously not the target audience. I would say that a vast percentage of Americans do live paycheck to paycheck (or close enough) to value this service.
- a_imho 11y agoAlexis Ohanian, Investor, Digit & Executive Chairman, Reddit
- deepnet 11y agoDogecoin ?
- zodPod 11y agoTo value them randomly extracting money from my account and holding it in their own accounts for whatever? Are you saying the vast percentage of Americans are sheep who are so bad with money they'd rather have someone rob them repeatedly of small amounts of money in hopes of someday getting it back?
- johnnyfaehell 11y agoThey say they're confident they won't put you into an overdraft but limit the number of times they'll pay for putting you into one to 2 times. That doesn't sound confident.
- jimmyplaysdrums 11y agoI've found digit to be quite useful :)
- Johnie 11y agoBased on the comments here that HN is not the right audience for Digit. It's also worth noting that HN is not representative of the majority of the population in the country. CFSI has quite a bit of research on the financial health in the country [1]. Services, like Digit and Even [even.me], solve a problem that many of us don't face. I'm curious how the HN population manage your money. Do people differentiate between savings and investing? How are people saving? Are people seeking yield/greater return? Also, what tools/apps do you guys use/like? [1] http://www.cfsinnovation.com/Document-Library/Understanding-Consumer-Financial-Health http://www.cfsinnovation.com/Document-Library/Understanding-...
- knicholes 11y agoI'm pretty sure that Adobe auto-enrolled me into a Vanguard Target Retirement 2050 Fund 401k after 60 days of employment. Also, I put 25% of my income in to ESPP (purchase stocks at a guaranteed 15% discount with a lock-in price for two years, so if the stock goes up, it's 15% + whatever the stock increase is). This has been by far my most successful investment (because I was buying at 38 and selling at 72-94 for two years). I also have a chunk of cash set aside for when they finally realize I'm a useless employee and can me (while I search for a new job). I also am trying to time the market, which I've been told is a bad idea and impossible, but I haven't done the research to actually know this for sure. I've sold all of my stocks that I can anticipating another large market correction (look at the S&P 500 graph and assume that the past will influence the future, which is also crazy) with the intent to re-enter the market at the bottom of the correction.
- shostack 11y agoWhile it sounds like you've been lucky thus far, the brightest economic minds are pretty much in agreement that for Joe Investor (and most people for that matter), trying to time the market is a fool's bet, so you can save yourself the research there.
- owly 11y agoAre people so out of touch with their economic situation that they are unable to save on their own? Really not a fan of this, just another attack vector/demographic information gathering waste of cpu cycles.
- billmalarky 11y agoAgreed, these "financial solutions" are starting to remind me of "dieting solutions."
- picrow 11y agoDev Hipsters hate banks.. so their solution is be even worse than the people they hate lol. I'll keep my money with the bros who know how to handle it, instead of some yuppie.
- mmanfrin 11y agoI'm pretty bad at spending money, and this is kind of how I have gotten myself to save more -- not Digit, but the 'squirrel away money so you dont think about it' strategy. I keep an eye on my main bank account, but I have about 5 other accounts all deducting from it at various points in the month. Some goes to (autoinvested) stocks, some goes nonliquid LendingClun, some goes to a few other bank accounts. My goal is to try to keep the main account 'floating', because while that floats, the other ships rise. In practice, I tend to keep a float for a bit, then splurge and have to bring money back in. The one thing I think that is helping me with this is YNAB. Forcing me to prebudget (and then to deduct from other budgets if I overspend) has made me much more conscious of habits.
- zodPod 11y agoIf this kind of stuff moved the money into another account of mine, this would sound great but I'm just handing it to some random company that I've never heard of? Sounds safe... I'll just continue to have a recurring transfer setup from my checking to my savings... Thanks.
- tomlongson 11y agoI tried it out, but my biggest complaint was after withdrawing money, Digit immediately started taking out money again. If one withdraws money, they might not want it being sucked back out immediately.
- tdaltonc 11y agoThe vitriol and negativity in this thread makes me really not want to share my things here.