By now, there are countless apps that boast the ability to help you save without the "you" part: Set a goal, like your friend's upcoming summer wedding, and watch the cash flow in without lifting a finger. These automatic saving apps are great, namely because stashing money away voluntarily can be so hard.
While saving apps have become a mainstay in fintech, companies and countless surveys have found that for Americans with high-interest credit card debt, saving just isn't top priority. With the national credit card debt at a record high of over $1 trillion, it's no wonder that paying off that debt comes first. This dilemma is what Digit Pay, a new feature of the savings app Digit, is aiming to help its users with.
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On Digit Pay, all you have to do is set a credit card debt reduction goal, and the app does the work for you by automatically taking money from your checking account (based on what you can afford), and making small payments to your credit card each month. Digit found that over 75% of its users have credit card debt, many of whom use their Digit savings to make payments toward their credit cards anyway, which is what makes Digit Pay such a logical next step for the app and its users.
"Having credit card debt is expensive and it steals from our future selves. Credit card companies give out these pieces of plastic that can buy anything at anytime, but offer no built-in protections for consumers who use them. It’s irresponsible on the part of these financial institutions," Ethan Bloch, founder and CEO of Digit, told Refinery29 over email.
In many ways, it makes so much sense for Digit to enter this territory. The app has had great success in helping its users save: In the three years since it rolled out, Digit has helped users save a collective $1 billion. This interest in alleviating credit card debt is unique to Digit Pay – and is, notably, one that banks and credit card companies do not share.
"[Credit card debt] is a pervasive issue, and it’s one that banks aren’t set up to solve. Banks don’t exist to improve the financial health of their customers. They exist to take deposits and make loans. They want to make money on your money, so solving the issue of credit card debt doesn’t make business sense for banks," says Bloch.
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Digit, being an app, doesn't have these limitations. It charges a $2.99 monthly fee, but when you save for three consecutive months, Digit automatically gives you a 1% annualized Savings Bonus, paid out quarterly.
It's commendable that Digit is taking on the task of addressing the national credit card debt problem. Digit Pay marks a new frontier in an industry committed to streamlining processes and prioritizing consumer ease while minimizing user effort: Dating, food delivery, dog-walking, and now, helping you pay off credit card debt bit by bit. There's an app for that.
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