With fewer than half of Americans having even $500 in a savings account, according to a survey by Bankrate, we should welcome effective tools that encourage putting money away to meet future financial needs. That includes some new apps that build savings in sophisticated ways that exploit such emerging technologies as artificial intelligence.
We looked at three such apps. Each opens a savings account on its platform, then transfers money to it on your behalf from your checking account. The accounts are FDIC-insured, just like those you open at regular financial institutions. However, a small disadvantage is that you could wait up to a few days for funds transferred from your bank checking account to show up in the savings account hosted by the app.
All but one, Digit, are free to use but offer no interest on your savings. That’s a fairly small sacrifice in an era in which major-bank savings accounts typically pay a tiny interest rate (typically around 0.01%), and even those at online banks pay little more than 1%.
And the apps promise savings techniques that you may lack the time or willpower to implement, like socking away money based on a multi-month analysis of what you can afford to save, or from what you unexpectedly didn’t spend in a certain store, or on a particular budgeted expense.
Available for iOS and Android.
Digit is one of the buzzier savings apps--or it was, at least, until it began charging a monthly $2.99 fee. Thankfully, it still offers a 100-day free trial if you want to give it a try before facing the aforementioned price-tag. After that, the app pays a quarterly bonus payment of 1% of your savings balance. That payout would essentially make the app to free to use, provided your balance for the quarter stayed at or above $900.
This app uses artificial intelligence (AI) to analyze your spending, by sifting through your past checking-account transactions and anticipating how much money you’ll spend in the future. Then every two to three days, based on that analysis, it estimates what you can afford to save and actually squirrels that money away. These savings transfers typically range between $2 and $50.
What if Digit’s “intelligence” fails, and the app withdraws too much,triggering an overdraft on your checking account? The company will pay the overdraft fee up to two times. Digit also gives you the option to set a maximum withdrawal (say, $15), to minimize the chances of the app oversaving.
Digit’s AI makes it a worthwhile app to try if you’re looking to save in a way that removes your willpower to do so, and replaces it with automatic contributions that you may barely notice. Needless to say, if you’re a small-time spender whose balance won’t be enough to recoup the app’s monthly fees through quarterly interest payments, you’ll need to decide if its stealth approach to savings is worth $3 a month to you.
Available for iOS and Android.
This app doesn’t use AI for calculations, but instead allows you to set conditional savings “rules,” in which anything from practicing good habits to making purchases automatically trigger savings contributions.
It does this with help from the applet, IFTTT (If This Then That), which allows you to link Qapital to other apps to encourage positive behaviors to drive rewards. For example, if you wanted to reward yourself for jogging, you could have the Apple health app let Qapital know you’ve jogged; the savings app could then send $1 from your checking to your savings account.
You can also instruct Qapital to round up every purchase to the nearest dollar, and deposit the fractions of dollars into the savings account. Or, set a budget for a particular store or type of purchase--and then save the underspent proportion of that figure. If you often visit CVS, say, you could input into the app a budget per visit of $25. Should you overspend, Qapital will not move any money into your savings. But if you instead spend $15, Qapital will move the unspent $10 into savings.
Qapital also allows you to divide your savings into a number of sub-accounts, around chosen goals. Let’s say you wanted to spend less on coffee at Starbucks for the remainder of the year, and use the savings for a vacation. You could program your usual three Starbucks visits into the app, at $5 a pop, and should you skip a visit, or opt for a Tall rather than a Venti, what you don’t spend of that $5 goes into your vacation fund.
Since the rules for goals are set to react automatically, Qapital has put in a failsafe where it won’t pull any money from your account if the balance falls below $100.
This app might offer a fine kickstart to people who are just beginning to save, and who want to do so for a specific goal and in some relatively painless ways, like automatically saving fractions of a dollar.
Qapital also may suit those who have as yet little commitment to another bank, since the company has aspirations to becoming an all-around bank. Qapital is currently in beta with both a debit card and checking accounts, with plans for rollout later this year. If it proceeds to launch these, it promises to eliminate any delays in transferring money between your accounts, since both would be hosted by Qapital and its affiliate bank, Lincoln Savings Bank. Holders of the debit card would also earn interest on their savings, at a rate not yet disclosed.
Currently only available on iOS.
Don’t want to rely on saving money automatically? Tip Yourself might be the perfect fit. Instead of setting up the app to automatically take money out of your account, Tip Yourself allows users to set up “tip jars” for specific financial goals, into which they actively deposit money ($2, $5, $10, or a customizable amount of up to $250).
For example, if you want to tip yourself $3 after working out, you can enter it in the app. You can even link the app with Facebook to make your tips visible to friends, if you wish. When placing a tip, users are encouraged to explain why they’re tipping themselves or to provide progress reports. For users who want to be more involved in their savings, this might be the perfect app. You’re in charge of deciding how much you want to save, and when. It’s a good way to stay on track with your savings, with the added bonus of being social. The app’s user interface is similar in feel to that of the popular Venmo, where you can see your friends’ payments to each other.
Tip Yourself does, however, rely more on your own commitment to both savings and self-praise than the other two apps. Where the others use stealth to boost savings, Tip Yourself relies on you to decide, in the moment, that saving is more important than the immediate temptations to spend.