Back when people paid for things in cash, it was common to save your spare change. Once you had enough coins, you’d roll them up, convert them to cash and buy that item you’ve had your eye on. Spare change jars were a great way to build a vacation fund, emergency savings fund or holiday savings fund. Spare change apps take that same concept and move it into the 21st century.
Each spare change app functions a little differently, but they all revolve around the same basic concept. You save small increments of cash that you theoretically won’t miss. The money gets put into a digital piggybank of sorts, so it’s separated from the funds in your primary bank account. Then you can use the money you save to take care of key financial goals.
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Spare change apps aren’t for everyone. If you’re living paycheck to paycheck and facing challenges with overdrafts, then these apps may not be for you. On the other hand, if you have room in your budget and you’re looking for creative ways to jumpstart your financial goals, a spare change app may be the tool you’re looking for. To help you decide, Debt.com has reviewed three spare change apps – Qoins, Acorns, and Digit.
Spare change app comparison
| Qoins | Acorns | Digit | |
|---|---|---|---|
| How is the money saved? | Rounds charges made from your bank account up to the nearest dollar | Rounds charges made from your bank account up to the nearest dollar | Calculators small-dollar transfers from your bank account 2-3 times per week |
| Is the app’s account FDIC-insured? | Yes | No | Yes |
| Minimum balance | $0 | $0 | n/a |
| What happens with the funds? | Qoins uses the saved funds to pay off debts you designate. | Acorns automatically invests the money in small portfolios | You set savings goals and Digit puts funds towards each goal. |
| Does the account earn interest? | No | Investments earn interest based on market conditions | 1% annual savings bonus on funds saved in the account. |
| Fee | $1.99 per month, deducted from your spare change each month | $1 per month if your balance is under $5,000, 0.25% of balances over $5,000 | $2.99 per month, first month is free |
Qoins
The spare change app designed to pay off debt
Qoins is a traditional spare change app, in that it links up to one or more accounts and rounds transactions on those accounts up to the nearest dollar. Then you tell Qoins when you want to pay off debt. You can choose at the end of the month or anytime you hit a preset saved amount. Then Qoins mails a check to the lender. Simply provide the mailing address and your account number and Qoins will help you start paying off the debt.
According to Christian Zimmerman, the founder and creator of Qoins, the app helps people pay off an average of $1,100 of debt per year. You can pay off credit cards, student loans, or any loan you want.
I was trying to make additional payments toward my student loans because the grace period ended. My problem wasn’t so much saving, but more so making that additional payment. I thought ‘well if I made the additional payment without thinking about it, I’d probably feel happier about it.
Christian Zimmerman, Founder of Qoins
Acorns
The spare change app for savings and investment
While Qoins is designed to help you achieve the goal of becoming debt free, Acorns is designed to help you start learning to invest. The front-end saving method is the same. The app connects to an account and rounds up transactions to the nearest dollar. The difference is what the app does with your money. In this case, once you have at least $5 in savings, it invests your money into an investment portfolio.
You don’t even need to know about investments. It offers five portfolios based on your risk tolerance and financial situation. You answer five questions about where your finances are and what you want to accomplish, then Acorns recommends the best portfolio for your needs.
This is a good way to start investing, although if you want to make any real money, you may need to make a manual deposit to give yourself a large sum of cash to start with. Unfortunately, that somewhat defeats the purpose of a spare change app because you’ll need to generate those funds.
Learn more about Acorns | Get the Acorns app
Digit
A different take on a spare change app
Digit works a little differently from the other two spare change apps reviewed above. Instead of rounding up transactions, it has a unique algorithm that assesses your weekly spending. Then it makes 2-3 small cash withdrawals from your account. The transfers are typically between $50-$30, depending on your spending habits. Digit says their algorithm can even account for varying income, so it accounts for people who work freelance and based on tips or commissions.
Digit also doesn’t do anything specific with your funds. You set savings categories within your FDIC-insured Digit account and divvy the money up accordingly. The account does not earn interest, but it does have a 1% annual bonus.
Learn more about Digit | Get the Digit app
