Can we take just a moment to acknowledge how flippin’ cool technology is nowadays? I mean, really. You can pay for things with the wave of your phone, voice command to hear your favorite song, and use your fingerprint to log in to accounts. Of course, it didn’t take long for the personal finance industry to hop on this little power train. First, there were just banking apps, then came apps that analyze and track your spending, and now there are apps that force you to save money — or even invest it. That’s right: we’re digging deep into the Acorns vs. Digit debate today. (I mean, haven’t you missed debates now that election season is over? No? Too soon?)
There are tons of apps hitting the Apple and Google Play stores every day. But with personal finance especially, you want to be super duper careful about what you use. Digit and Acorns are both verified and reputable apps, so we’re mostly just chatting about features today.
Here’s the main difference:
Digit saves your money in an FDIC secured account and Acorns invests your money in predetermined ETFs (Exchange Traded Funds). So at the heart of it, one app saves money and the other one invests. The question then becomes, which is right for you?
Of course, we’re not about to stop with that open ended question, right?! I hope you know me better than that.
Okay, let’s get real for a second. Do you have trouble keeping your mitts off your hard earned money? Do you feel like saved up cash burns a hole in your … bank account? If so, Digit might be right for you.
Once you link your bank account up, Digit analyzes your spending habits and then decides where you have some unnecessary cash. Based on that analysis, Digit starts to make withdrawals and places them in an FDIC secured account. Their site is specific to say, “Digit never transfers more than you can afford, so you don’t have to worry about over-drafting your account. In fact, we have a no-overdraft guarantee.” At any point, you can withdraw the cash Digit saves for you — it just takes about one business day to get back to your account.
While Digit covers any overdraft fee associated with them for up to 2 times per customer, there is still a chance that it could pull too much out of your account. There’s no way to communicate that you had money in that account earmarked for something else. You are always able to pull saved money back into your checking account, but it does take one business day which could result in a late fee on something.
Digit is free to try, but once the trial period is over there is a $2.99 monthly fee. Your subscription can be canceled at any time.
Overall, Digit seems like a great fit for someone who has trouble saving or who tends to spend money they see. However, it’s methods aren’t perfect and there’s the chance it could take a little more than you were expecting.
Acorns methods are similar to Digit in that it links directly to your accounts and makes withdrawals. However, rather than saving that cash, it invests it. This is a great solution if have wanted to dabble in the stock market but were nervous to venture out on your own. They call this method “Micro Investing”.
Basically, Acorns rounds each purchase up to the nearest dollar, and then invests that change in six different exchange traded funds. If you want to invest more, you can add $5 – $50,000 to your account at any time. After linking your account(s), you tell Acorns a little bit about your goals. It will ask you how aggressive you want to be in your investments and adjust your settings based on that. Their ranking system goes from conservative to aggressive with graphs to show you the differences in each choice.
Unlike Digit, Acorns can link to an unlimited amount of accounts — including credit cards — making it a little easier for people who do not like using their checking account for everyday purposes.
However, if you feel like you could find yourself in the position of needing cash right away, Acorns may not be for you. Yes, you can make a withdrawal at any time, but your cash could also be tied up in investments right when you need it. Digit allows you to pull back exactly what it took out, which may not be possible with Acorns. But, what Acorns pulls out is more predictable as it is just rounded up change (taken in daily, weekly, or monthly chunks).
At the end of the day, it all boils down to your goals. Are you hunting for a way to save money? Or are you wanting to diversify your portfolio and test out the stock market? Both methods can ultimately bring you wealth, but will feel vastly different in the short term. I’m curious to know what you think and if you’ve tried one or both of these apps! What was your experience?