In April, automated savings startup Digit announced that in 100 days it would begin charging $2.99 a month to people using its service to set aside money for a rainy day or help pay their bills. Well, 100 days have almost passed, and it’s almost time for those changes to go into effect.
For Digit, the switch to charging a monthly subscription fee represents a big change for its business model. The company previously made money off the aggregate interest from savings it held on behalf of its users, but made the decision early this year to pass that interest back to users and charge them monthly instead.
In making that decision, Digit CEO Ethan Bloch told me the subscription fee model more aligns with the company’s values than making money off ads or becoming a lead-gen engine for financial products most of its users don’t need.
While some users complained when Digit sent its initial emails about the change, the service continues to grow pretty rapidly. Earlier this spring, Digit announced it had helped its users save more than $500 million in total since being founded. In just about three months since then, that amount has increased to more than $700 million.
“We lost less users than we thought we would with that first announcement,” Bloch told me. He acknowledges, though, that it’s still too early to tell how things will shake out once it starts taking $3 a month out of people’s savings. “Candidly, I think we’ll know a lot more in August,” he said.
Digit began reaching out to users again today to remind them of the change. For users who had signed up prior to their initial announcement, Digit will send emails three days before the first $2.99 charge appears. The company plans to follow up with a text reminder again the day before it charges them, and will also send an email receipt the day that they’re charged.
If that sounds like a lot of communication over a relatively small charge, it’s because Digit wants to err on the side of…