Saving made simple: Services that stash cash automatically

March 18, 2015 GMT

NEW YORK (AP) — Sit back, relax, and save some money. Two mobile services are making it easier to build your savings without giving it much thought.

Acorns and Digit automatically transfer small amounts from your checking account to a savings or investment account. They’re an option for consumers to do what financial planners have advised for years: Build your savings through automatic transfers.

I tried both Acorns and Digit for about two weeks and found that they are easy to use and have the potential to build up some significant savings over time.


Of course, it’s not difficult to set up a weekly or monthly transfer to an online savings account. But both services are targeting the under 35 crowd, who are less likely to save on their own.

Acorns has grown to about 250,000 active users since its August launch, the company says. Digit, which launched in February, declined to say how many users it has, but expects them to save a collective $1 million in March.

Here’s how they work:


To use Acorns, individuals link their debit or credit cards to an app that automatically rounds up every purchase to the nearest dollar. The amount is invested in a portfolio of stocks and bonds.

Rounding up purchases can add up quickly, especially if you mainly use cards instead of cash, like I do. A $26.34 supermarket run, for example, resulted in 66 cents being moved into my Acorns account. In two days, Acorns saved me $7.30. The average user saves about $55 a month from roundups, says co-founder Jeff Cruttenden. Users can also manually transfer cash or set up recurring deposits.

The savings are invested in exchange-traded funds, which are a basket of stocks or bonds that trade on the stock market. Every portfolio is made up of six ETFs that offer a range of investment options, from conservative to aggressive. Accounts are insured by the Securities Investor Protection Corp.

The app has graphs that enable you to see how much money you can accumulate. For example, a monthly deposit of $55 into an aggressive portfolio can grow to $10,438 in 10 years.

Acorns charges $1 a month for accounts under $5,000. For accounts over that amount, it charges 0.25 percent a year, which comes to about $2.08 a month for a balance of $10,000. There are no fees for withdrawing money, and no minimums. “We wanted to create something that’s really easy to start investing,” says Cruttenden



The best part about Digit is its ability to calculate how much to save from day to day. After connecting a checking account to Digit, its algorithm analyzes account activity to determine how much you typically earn and spend. Based on its findings, it periodically transfers small amounts into a Digit account.

My first savings deposit was for $1.57. Not much, but it was a start. Over two weeks, Digit saved me a total of $3.61. I don’t keep much money in my checking account, so that explains the particularly small amount. For the average Digit user, deposits are about $18 every 2 to 3 days, says founder Ethan Bloch. That can add up to more than $2,000 a year.

Digit guarantees its transfers won’t cause payments to bounce. If that happens, it will pay overdraft fees. The automated withdrawals can be turned off at any time, and cash can be manually transferred to the Digit account.

Digit requires you to sign up on its website,, and then all banking is done through text message. I’m used to banking within apps, but I found texting to be simpler. There’s a list of commands, like “savings” to see your balance or “withdraw” to make a withdrawal. If you plan to try Digit, make sure you have unlimited texting to avoid extra wireless charges. Texts came in every day with my checking account balance.

Digit doesn’t charge any fees and transfers are quick; withdrawn amounts hit my account the next day.

The downside is that users will miss out on earning interest. Digit places its users’ deposits in accounts with Wells Fargo and BofI Federal Bank and makes money from the interest on those accounts. Like any bank, the accounts are insured by the Federal Deposit Insurance Corp.

Later this year, Digit plans to offer an account that earns interest.

BOTTOM LINE: Acorns is better for people who want to start investing in the stock market, but don’t have the cash to open an account at a big investment bank or want to avoid high fees. Digit is best for those who are not saving enough and need help figuring out how much they can afford to save.






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