
Digit: Save money without thinking about it - Jhsto
https://digit.co/
======
kchoudhu
I 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.

~~~
callumlocke
I've come to think savings interest is bullshit. In the past, whenever I
calculated how much I'd earn in interest if I put away a decent part of my
salary every month, it was always shockingly low, and this put me off saving.

Now I think of saving purely as a way to put money out of my immediate reach.
For me, the reason for saving £200/month is simply that after a year I'll have
£2.4k, not so I can get a paltry amount of interest on top of that.

From this point of view, all that matters in a savings account is customer
service and what you call gimmicks. I would definitely try out this service if
it came to the UK.

I totally accept some people may choose to give their finances the time and
attention necessary to earn real interest, but for me saving is just paying
future-me some money.

~~~
lsd5you
That's why it's called savings and not investment (I realise in some economic
sense they are equivalent).

We have been engaged in collective madness over investment/savings returns. I
remember conversations (probably 2007ish) where I was trying to point out to a
banker that the nominal return cannot exceed inflation in the long run. How is
it that pension funds can be predicated on a 6-8% return. Well it only works
if we have a 1) a crash every so often wiping out everyones gains or 2) hyper
inflation (or 3 some other people just giving money away).

In fact we seem to have reached a somewhat contradictory outcome where assets
inflated once, and then we continue to live with low returns and inflated
assets (some people would have it that the baby boomers are protecting their
wealth), the zombie japanese economy mode.

It is a somewhat arbitrary and feudal system of haves and have nots. You
bought a house at the right place/time? Well you're a millionaire now (even if
you paid nothing but intrest on the mortgage). Anyway it would seem to make a
mockery of the economic precepts by which the modern economy is supposed to
run.

I have always been pro-crash (even more so anti-boom).

~~~
CPLX
> I was trying to point out to a banker that the nominal return cannot exceed
> inflation in the long run

Someone should point out that this line of reasoning is just flat wrong for
reasons obvious to any first year economics student.

~~~
lox
Whilst it sounded cute, an actual explanation would have been great. Mind
expanding?

~~~
CPLX
It's not a zero-sum game, there are more assets now than when we all lived in
mud huts or roamed the plains in search of food. Were there to be no real
returns to investment we would all have just been trading around the same
fixed amount of assets for the last 10,000 years, which is of course
nonsensical.

His argument is that nominal returns adjusted for inflation in the long run
average to zero. Which is saying that there is no such thing as a real return
to investment. However that is incorrect, as investing in productive assets
can increase the world's net wealth and productive capacity.

As one can observe by the vast increase in our collective productive capacity
from the stone age through the present day.

~~~
lsd5you
Substitute inflation for wage inflation. It's not that there are no returns,
but that the rate of return is completely decoupled from reality. Productivity
growth is what (1-2%)? Real terms wage inflation is what (~0% since the 70s).

~~~
base
Productivity growth is just a part of the equation. You have population growth
and several other factors.

------
jellicle
I 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-
happe...](https://help.digit.co/hc/en-us/articles/203931308-What-happens-to-
my-funds-if-Digit-goes-out-of-business-)

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-D...](https://help.digit.co/hc/en-us/articles/217382378-How-does-Digit-
make-money-)

> 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
They'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.

------
MichaelBurge
Why 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'.

~~~
shostack
Knowing 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.

~~~
c22
Of course if you're becoming a full-time mom it's not quite the same as not
having to work. People who aren't moms charge in the neighborhood of 30k a
year to full-time manage other people's kids.

------
theodorton
My 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
Perhaps 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
Bank of America has a similar program called "Keep the Change".

[https://www.bankofamerica.com/deposits/manage/keep-the-
chang...](https://www.bankofamerica.com/deposits/manage/keep-the-change.go)

~~~
driverdan
Too bad it's BoA.

------
owly
Are 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
Agreed, these "financial solutions" are starting to remind me of "dieting
solutions."

------
mmanfrin
I'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.

------
Johnie
Based 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-...](http://www.cfsinnovation.com/Document-
Library/Understanding-Consumer-Financial-Health)

~~~
knicholes
I'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
While 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.

------
anexprogrammer
This 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.

------
Cartwright2
One 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.

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matt_wulfeck
> 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
> Is this what we've come to with our personal economy?

No, we have not. Nobody is going to use this service.

------
yitchelle
Are these folks just redressing "auto-scheduled direct transfer to a savings
account" in new emperor's clothing?

------
piptastic
Based 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
Alexis Ohanian, Investor, Digit & Executive Chairman, Reddit

~~~
deepnet
Dogecoin ?

------
avalexandrov
I 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
Clearly 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.

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johnnyfaehell
They 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.

------
douche
I 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
I 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.

------
stevoski
My 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.

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joolze
“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?!"

------
zodPod
If 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.

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IshKebab
Interesting 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
this is what i do

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tomlongson
I 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.

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tdaltonc
The vitriol and negativity in this thread makes me really not want to share my
things here.

------
noja
Beware: I didn't think about it, and I didn't save any money.

------
dmr__
Wow - saving for suckas

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jimmyplaysdrums
I've found digit to be quite useful :)

------
hkmurakami
I guess automated 401k payroll deductions is the ultimate form of this sort of
philosophy.

~~~
noondip
Not 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.

