Digit combines Savings and Debt Repayment

Digit’s mobile app for savings includes a new feature called “Digit Pay” allowing its users to automatically send money from a checking account to a dedicated savings fund. This money pot will apply to repaying their credit card debt. This service seems relevant as 75% of the American population could be concerned.

Digit initially was a mobile app featuring an account aggregation service. Their prime goal was to focus on smart savings. With “Digit Pay”, they will provide their users with a means to build a money pot for faster credit card debt repayment. Each day, a small amount is automatically transferred –at the most convenient moment– from their checking account to their Digit account. This amount is assessed based on each customer’s income and expenses. Once a month, this balance is transferred to the credit card they specified.

The amounts stored to the Digit app are available at any time, enabling customers to transfer their savings whenever they need it, and avoiding overdraft risks. Also, Digit guarantees a 1% annualised savings bonus for users managing to save money three months in a row.

The users’ personal information is stored encrypted. The funds held by the company are FDIC-insured up to a balance of $250,000.

Comments – Digit aiming beyond savings

Digit’s approach to savings “for rainy days” is consistent with the current state of the credit market in the US. Credit card debt outstanding on this market is worth roughly $1 billion, almost $17,000 per household and $1,292 in interests each year. Digit stands out via combining savings and debt repayment upstream.

In France, some companies have been focusing on enabling customers to set smart savings goals. Bruno, for instance, proposes a relatively similar Messenger-based chatbots for savings. Yet, it remains limited since it does not include a feature for transferring money. Saved amounts are then stuck on a temporary account. However, considering the changes entailed by European Regulation (PSD2), budget management tools and other aggregation services are being enhanced through including options for transferring money to other accounts, as well (see Budget Insight, for instance). They are increasingly gaining strength in facing traditional banks, even if these institutions are also reshaping their strategies based on these changes (Société Générale, BPCE). Digit highlights additional diversification opportunities for companies whose core business relies on applying predictive analytics to building up savings.