Are you having trouble saving money while simultaneously dealing with excessive credit card debt? Mobile savings apps such as Digit and Qapital can help you establish an automatic saving routine – but Digit has introduced a new Digit Pay feature to assist with paying down credit card debt while you save.
According to the company, approximately 75% of Digit’s customer base carries credit card debt. It’s likely that a significant number of those customers only make minimum payments on their cards each month. Repayment times and interest charges grow quickly when you are only making minimum payments – and it only gets worse if you continue to rack up new charges each month.
Digit Pay assists by allowing you to set a credit card debt goal to chip away at your debt. The Digit app analyzes your spending and income patterns, determines how much you can afford to save, and withdraws funds from your linked account to establish savings funds. Similarly, the Digit Pay component will withdraw funds in accordance with any credit card debt reduction goals you set and then automatically use those funds to make payments against your credit card debt.
Want to increase your credit card debt reduction? Simply use the “Boost” command to save even more cash to apply toward your credit card payments. Activate the app, select the credit card debt (or debts) that you want to increase payments for, and click on the Boost tab. A lightning bolt will appear on that debt goal to remind you of the increase.
To return to the regular savings rate, repeat the above steps but select “Turn Boost Off”. The lightning bolt will disappear and the savings rate toward that debt reduction goal will be restored to the original value.
Keep in mind that Digit Pay is designed to be a supplement to your regular credit card payment in order to help you pay down debt – not to manage your regular payments. If you are using Digit Pay as your only payment means, make sure you aren’t applying any new payments to that card, and that your Digit Pay goal will at least cover the minimum payment. Otherwise, you risk overspending in a given month and swamping debt reduction goals.
Digit’s other source of value is in its convenience. The app allows you to chip away at your debt without any further effort on your part. However, as with any automated system, you should periodically check balances to make sure the system is working as intended. Payment alerts are wise, but you should consider checking your accounts regularly in any case to look for signs of identity theft or fraud. If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, join MoneyTips.
It’s also important to update your credit card or bank account information whenever it changes to keep savings and payments flowing smoothly. If you want more credit, check out our list of credit card offers.
The Digit App is not free – there’s a $2.99 monthly charge that applies after the 100-day free introductory period. However, you’ll recoup some of those charges through a 1% annualized savings bonus that kicks in after three months.
While the Digit Pay app is a useful tool to pay off credit card debt, it can’t stop you from racking up debt in the first place. Any debt reduction plan should start with a review of your budget and a revised spending plan.
Combine Digit Pay with a streamlined budget, and you could be on the way to eliminating your credit card debt entirely – and perhaps never again charging more than you can afford to pay off at the end of the month.
If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.