Last week, Digit announced that it’d be implementing a $2.99 monthly fee for current and new users after 100 days…and the financial internet went nucking futs. In case you’re unfamiliar with Digit, it’s a formerly free service that hooks to your bank account, analyzes your spending and tucks away a few dollars here and there to an FDIC-insured account. There’s also stuff like daily account balance text messages, random emojis and a “no overdraft guarantee” but that’s not why I’m here today.
The response to Digit’s new fee — mass claims of closed accounts and displeasure — reminds me of what happened to Netflix in 2011 when they tried to change their model. Customers revolted and the company eventually capitulated (my new favorite word) and went back to its old pricing structure. I was one of those upset customers, but can’t say that’s how I felt when Digit broke the news.
Part of the reason I love Digit is because it saves me money I wouldn’t save otherwise despite having automatic transfers set up between my existing bank accounts. For example, I have direct deposit from work spread across banks and have a monthly budget with all sorts of line items, but sometimes I don’t spend the allocated amount during a given week or month. Digit will automatically move some amount to its account and I don’t notice it’s gone because, in my head, I already spent that money.
If I see extra funds sitting in my account, I feel like a king and tend to do what kings do: Style on ‘em. I should note that “stylin’ on ‘em” for me usually means buying food or something I really don’t need but for whatever reason feel justified in purchasing. My natural instinct isn’t to say “Oh, looks like I’m $20 ahead this week. Let me move that to savings and forget I did it!” I suck at ad-hoc saving and that’s where I get the most value from Digit. In a way, it protects me from myself. Hence me being cool with the fee. The benefit far outweighs the cost.
I’ve seen a lot of folks say $36 a year for the service is just too much when the goal is to save money instead of spend it in fees. I totally get the perspective, but here’s the thing aside from knowing some people spend more than $36/year in fruit snacks: if the average user saves between $80 and $170 per month, the fee means the average user is now saving between $77 and $167. Is that not still a come-up one likely wouldn’t have experienced without other efforts? Even if we annualize that and say the average user saves between $960 and $2040 a year, we’re now talking about savings of $924 and $2004.
I do not compute the outrage. Even if it only saves you $20/month, you’re still netting $17 that you likely wouldn’t have tucked away unless you’re one of those diligent folks who I whole-handily salute for being so legit with it.
Part of the challenge is we live in a “free or nah” era. Most stuff we consume online is free and many businesses operate with some version of a freemium model, so it’s difficult to get people to see that some things are worth a subjectively small amount of bucks. Additionally, businesses exist to make money. It doesn’t matter if they’re profiting off your data or upcharging to get extra lives or power features so you can finally get to the next level of whatever mobile game is hot today. In Digit’s case, they went from revenue off interest (invisible) for holding the money to a monthly fee (visible), which can be jarring since the cost is now front and center.
My goal is not to get you to sign up for or stay with Digit. It’s to get you to think about the cost/benefit of joining or leaving any service that may benefit you personally, professionally or financially. It’s up to you to decide whether or not it’s worth it. You know yourself way better than I do. So next time you decide to bolt or pass on a service, take some time to reflect on the why and do a cost-benefit analysis. Chances are it’ll save you some money and/or time either way.
Rich aka Ain’t Nobody Pay Me For This!