I used Digit for one year and saved thousands, but here's why I'm deleting the app - CNBC

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Over the last several years, a number of personal finance apps have made their way into the market — and onto our phone screens — and as a personal finance reporter, many of them caught my attention. But I'm not one to download just anything without doing my research and reading reviews. So when I finally decided to go ahead and download the Digit app, I knew I was making a well-informed decision.

Digit is an app that encourages people to save more money. It connects to your checking account and automatically saves small, random amounts of cash that it holds in a savings account until you decide how you want to use it. You can use the app to create as many savings buckets as you want (think: emergency fund, vacation, dog, home down payment, etc.), and the app will direct money from your checking account to your savings buckets daily. In other words, you're saving money without lifting a finger.

You can even set a limit as to how much money gets pulled out of your checking account on any given day, so you don't save too much and wind up with not enough cash to cover your expenses. You can also pause and unpause the automatic savings feature, which can come in handy if your checking account balance is getting dangerously low, and you don't want to end up hitting negative numbers. There's also an overdraft protection feature where Digit will not move cash from your checking to savings if doing so will cause you to overdraft your account.

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Why I first downloaded Digit

There were a bunch of little things I was using Digit to save up for, like a security deposit on an apartment, a celebration for my 26th birthday, Christmas gifts and a real estate investment I hope to make in the future (we're talking years from now). I didn't want to lump the money for all these goals into one savings account — I'm more of a visual learner, and I like to see my goals separated but organized. So I was really drawn to the savings bucket feature.

And since I was just beginning my financial wellness journey at the time, I also loved the idea of being able to scrape together as much in savings as possible without having to do anything to figure out how much I could really afford to save each month.

But after a year on the app and thousands of dollars saved, I realized that I reached a point where the app no longer fit into my financial habits. Here's why I decided to pull the plug on Digit.

1. I transitioned to zero-based budgeting

Zero-based budgeting — where you use every single dollar your earn for expenses and savings — is one of my biggest strategies for building wealth. It allows me to give every single dollar a job so that I make sure each of my paychecks is completely used up on expenses and savings with nothing leftover for mindless spending.

Of course, there're more than one way to create a plan for how you'll use your money. Some people opt for creating detailed spreadsheets while others may use the budgeting features on apps like Personal Capital or Mint. Zero-based budgeting just personally works best for me.

Since I was spending time making a plan for allocating for every dollar, I found I didn't really need Digit's randomized automatic saving anymore. I already knew exactly how much money I needed to put toward savings for each goal plus investing in my brokerage account. Because of this, there wasn't any room left for Digit to work its magic.

So I decided to pause the automatic savings feature in May, and I kept it that way.

2. It's not the best savings account

Most high-yield savings accounts currently offer an APY of 0.5%, but Digit only offers 0.1% APY (as of writing) that gets paid out quarterly, which means I wasn't earning anything much on my balance.

Sure, there's not a huge difference between 0.5% and 0.1%, and I'm not going to get rich leaving my money in a savings account. But it would be nice if Digit offered similar rates to other high-yield savings accounts.

I decided my money would be better housed in an Ally Online High-Yield Savings Account, so I could take advantage of the higher APY. Plus, Ally also uses a similar savings bucket format that allows users to save toward specific goals.

I really love the buckets feature because I like to see my savings separated by goal. And while that was initially a huge draw for me when it came to the Digit app, it made more sense to move my money to an app with a similar feature but more potential for earning from interest.

3. I was still paying for the app but not using the features

New Digit customers can get a free 30-day trial when they first sign up. But after that, it costs $5 per month to continue using the app. At first, I thought it was totally worth it since using the app's automatic savings feature allowed me to contribute a lot more money to my goals on autopilot every month. Essentially, I was paying for the convenience of not having to decide when and how much to save for those small goals.

But as time went on, and I made the decision to turn off the automatic savings setting and just manually moved my money into each bucket, I began to feel like the $5 a month was a waste. It was an expense I decided had to go, and so it was time to cancel the app.

Who should consider using Digit?

Digit

On Digit's secure site

• Annual Percentage Yield (APY)

  Begin earning 0.10% APY after using the app for three consecutive months

• Minimum balance

• Monthly fee

  30-day free trial; $5/month

• Maximum transactions

• Excessive transactions fee

• Overdraft fees

• Offer checking account?

• Offer ATM card?

Terms apply.

Even though I'm no longer using Digit, I still like the idea of the app. From the first time I learned about it, I thought the act of automatically saving random, small amounts of money every day was such a smart way to help users successfully ease into their savings goals — and I still think this is a great idea.

Setting up automatic savings allows us to overcome present bias, which often prevents us from making impactful long-term decisions for our future selves because we're biased toward pleasing our present selves. When it comes to our money, we may choose to spend now to satisfy our current wants rather than save for goals that are further into the future — like that down payment or a car.

Digit's features help users overcome this bias. By putting saving money on autopilot, you don't give yourself the choice between spending and saving. At the same time, you can customize the app to save smaller, less intimidating amounts of money you may barely notice if you're saving for a goal that's several years into the future.

While the Digit app has run its course for me, it can still be helpful for those who are new to creating and saving for financial goals, like college students, young adults and anyone who just wants a jumpstart with a new financial journey. It's also good for anyone who needs a little help when it comes to balancing how much they spend and save.

As for me, I'm excited to continue to tinker with my zero-based budget. That $5 I was spending on my monthly Digit subscription has been reallocated toward my Christmas gift savings bucket, so now I'm a little bit closer to getting my loved ones the presents they really want this year.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff's alone, and have not been reviewed, approved or otherwise endorsed by any third party.