Skip to main content

Guide to using a savings app

If you decide you want to use a savings app, we encourage you to keep the following tips in mind to ensure your savings are safe, accessible, and working for you.

In recent years, a number of companies have developed digital products focused on personal savings. These digital products—most often apps for your smart phone—might help you save more effectively.

This guide is focused primarily on savings apps that intend to help you move money from a checking account into a savings account by enabling you to set up automatic transfers or move money yourself on a regular basis.

Determine your savings target and goals

There are many savings apps you may consider, so it is important to first understand your savings goals and what you want from a savings app. Your goals can vary greatly at different points in your life. Different apps may be better situated for different situations, so take time to think through your financial goals before signing up for an app. Our resources can help.

Choose where you will open a savings account, if you don’t already have one

Most savings apps require you to already have some type of checking account but expect that you keep your savings with the app provider or its partner bank (more on this below). The app will connect to your existing bank account and then move funds into a new savings account. If you don’t already have a bank account, some apps may offer to open an account (likely a checking account) for you, as well as a savings account. If you need more information on how to open and maintain a bank account, check out our resources.

Identify the apps available

Savings apps typically work by transferring funds from your checking account into a new savings account. While the app itself can be used to move funds into the savings account, the app may not be owned by the bank that offers the savings account. Some apps are owned and operated by a bank that offers the savings account, while other apps are managed by a technology (“fintech”) company that partners with a bank that offers the savings account.

Regardless of which company owns the app, consider that an FDIC-member bank or NCUA-member credit union will insure your savings up to $250,000. Some apps save your money in investment accounts instead of savings accounts, so be sure to research and understand the risks involved with investment accounts if that is the case.

Make sure the app offers customer service options that work for you, such as a phone number, email, or chat function.

Select the app that works best for you

It is important to understand an app’s services. Some savings apps move money automatically by letting you set up rules that trigger savings each time an event occurs or after a certain amount of time passes. Other apps use algorithms to decide how much you’re able to save and don’t ask you to do anything beyond granting your permission.

Some savings apps are free but others charge some type of recurring fee. Only you can weigh the costs and benefits of paying for a savings app. It is worth analyzing your savings after a few months to make sure the app is helping you meet your savings goals.

If you are concerned about sharing your personal data with a savings app, you may want to take a look at this blog post on what you should know about sharing your financial information.

Things to consider after you’ve signed up

After you’ve started using a savings app, here are a few things to consider.

You may want to start saving small amounts initially to make sure you understand the app and that it is helping you meet your savings goals.

Some apps provide notifications in advance of transferring funds. You may find these useful for reviewing your savings.

You should also routinely monitor your checking account balance and transactions. Make sure that any automatic transfers you’ve set up are working as expected. If your bank or credit union offers mobile or digital banking capabilities, you can use them to check your transactions and statements. If you need help setting up mobile banking, see our resources.

Read the fine print and understand overdraft fees

When you grant a savings app permission to automatically move your money, there is some risk that you may not have enough money in your account to cover the transfer. This could cause you to overdraft your account and possibly be charged a fee from your bank. Many apps rely on ACH transfer technology that can take several days from when it starts moving your money to when the transfer finishes, and in that time you may have made additional transactions and your balance may no longer cover the transfer.

Many savings apps that automatically move money on your behalf include some measures to lessen the risks of overdrawing your account. For example, some apps will provide notifications in advance of a transfer. Other apps may cancel any automated transfers if they think your checking account is at risk of overdraft.

If a savings app makes a withdrawal that causes an overdraft fee, you may be able to get the app to provide a refund. Be sure to read the app’s terms and conditions to understand whether there is a reimbursement process, what steps need to be taken for an overdraft fee to qualify, and if you are comfortable with these terms.

Learn more here about overdraft protection and how to avoid fees.

Not sure a savings app is for you?

There are other ways to save automatically. Your current bank or credit union may already offer savings tools, like the ability to automatically transfer money from your checking account to a savings account each month. Similarly, if your employer offers direct deposit, they might let you split your paycheck deposit into multiple accounts, including a savings account. For more information on saving automatically, check out our resources.

No matter what your savings goals are and how you plan to achieve them, there are many resources to help you start saving. Check out the online resources the CFPB has as part of its Start Small Save Up Initiative.