There have been a number of spare change apps come out in the last couple of years. Apps such as Acorns, Digit, and Qapital all have the goal of automatically saving your spare change. You have probably read a review of some of these apps on other personal finance blogs. Almost all of the reviews I’ve read seem to think these apps are a great idea. I’m going to give the other bloggers the benefit of the doubt and assume they are not just giving the apps a good review due to being an affiliate of the apps. To be clear, I don’t have any problem with bloggers being affiliates for the apps. I’m an affiliate myself, I just think in some cases it might keep the bloggers from mentioning the cons of the apps. I do think there are positives to the spare change apps, but there are some significant negatives as well.
One of the main things I didn’t like about these apps when I first learned about them is that they took random amounts of money out of your account and put it into savings. I like to have more control over my money and want to know exactly how much is going from my checking account to the app account. The Acorns app has a $1 monthly fee. That might not seem like much, but when you’re saving such small amounts that could easily equate to a 5% fee or more. Digit and Qapital don’t have monthly fees which make them a better option in my opinion.
My biggest complaint about these apps is that the amounts put into savings are too small. I used Qapital for about a month and a half and it put $36 into the app savings account. Such a small amount of savings is not going to add up very quickly. It would be a lot easier to just set up an automatic transfer from checking to savings of $100 a month or whatever amount you can afford. Personally, I just send money to my IRA or 401k whenever I have some spare money and I haven’t had a problem maxing out my IRA. If instead of sending the money to a no interest savings account the apps sent the money directly to my IRA or to pay my student loan I would find these apps much more appealing. Since that would prevent the app from making money on their savings accounts I don’t see this kind of change taking place.
I realize that some people suck at saving money or have just never started saving money and they might find it easier to use one of these apps. Even though it is super easy to transfer money from your checking account to your IRA I know a lot of people will find it to be too much of a bother. For those people, these spare change apps could be a good deal. I think the apps might also be good for parents who are trying to teach their teens to save.
If you are already in control of your personal finances and have already developed a savings habit then I don’t think you should bother with these apps. You could use one of these apps to save money in addition to the money you regularly save. Personally, I don’t think it is worth my time to save money with these apps since it is another account I need to monitor and will use up more of my limited time and mental bandwidth. Since I already save (or pay down debt with) a large percentage of my income it is doubtful the apps will result in any extra money saved for me.
All of that being said I do have a Qapital referral link for those that are interested. If you sign up through the referral link and make a deposit towards your goal we will both make $5. If you would like a referral link via email you can leave a comment or send me an email and I’ll send you a referral link.
Do you think spare change apps actually help people save money?