By Susan Tompor
Detroit Free Press
WWR Article Summary (tl;dr) About 65 percent of millennials responding to a survey by LendEDU earlier this year indicated that they used a mobile payment app. Many millennials use Venmo now. But what other personal finance apps are out there? Susan Tompor, a personal finance columnist for the Detroit Free Press takes a look.
Detroit Free Press
With many millennials turning to their smartphones to pay up, instead of digging into their wallets for cash, it’s little surprise that everyone from startups to big banks want to smack a financial app on all those mobile wallets.
Splitting the cost for tickets for an upcoming football game or concert is super easy with apps like Venmo, Square Cash and Zelle.
“You risk looking old-fashioned paying with cash or credit cards,” said April Rudin, founder of The Rudin Group, a financial services marketing firm in New York City.
And we’re going to hear more about sending money via smartphone after Apple launched its iOS 11 system. One feature of the new iOS 11 system, which will not be available until later this fall, is that you won’t even need to download a new peer-to-peer payment app. It’s embedded in the software update. The feature called Apple Pay Cash will compete with Venmo, Zelle and others.
The industry calls such ideas “frictionless payments,” Rudin said.
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Some studies indicate we spend more when there’s less hassle. Could we save more that way, too?
Already, about 65 percent of millennials responding to a survey by LendEDU earlier this year indicated that they used a mobile payment app. Many millennials use Venmo now.
But what other personal finance apps are out there? Here’s a look:
-Want someone to help you think about your finances when you’re swamped juggling jobs, shopping for a car or even planning a wedding?
Some apps, such as Wela, offer advice when it comes to how to pay off debt or save for retirement. Sign up for the free app and you’ve got a robo-adviser named Benjamin.
The Benjamin bot gives customized answers based on your financial picture after aggregating information from more than 13,000 financial institutions.
Matt Reiner, CEO for Wela, said consumers in their 20s and 30s are trying to do a lot at their age and want to know how much they can spend guilt-free, while saving toward bigger goals.
“They’re looking for a silver bullet to change their situation,” Reiner said.
The ever-popular Mint.com has an app on how to track how you’re spending your money and how to budget, too. Some bank apps give budgeting advice, too.
-Want to find a few bucks here and there to cover your student loans?
The new Fifth Third Momentum app for the bank’s debit card customers can cut about three years of payments off the student loans that many millennials are carrying, according to Timothy Spence, chief strategy officer for Fifth Third Bank.
The game plan: If you set aside extra cash regularly, you’re paying off some of what you borrowed and the interest doesn’t keep building on that principal amount.
How you do it: If you’re a Fifth Third customer, you download the app, input your student loans and decide if you’d add an extra dollar each time you use your debit card or just round up the purchase to the next dollar.
Essentially, you’re rounding up to pay it down.
Millennials like the idea of making small payments because they’re not committing to give up a lot of extra cash each month, said Spence.
An upstart Chicago-based app called ChangED uses a similar “round up the change” strategy for paying down student loan debt and isn’t connected to one specific bank.
An app called Digit also enables users to set aside cash for specific goals. The app says it helps consumers figure out how much is “safe” to save based on their lifestyles. Digit said it doesn’t require you to figure out an arbitrary amount to transfer every month. After a free trial period, Digit charges a monthly fee of $2.99, and the service can be canceled any time.
-Want to start investing on the go?
Some millennials use an app called Acorns, which calls itself a “micro-investing” app. The idea is to target small amounts of money toward investments. Again, you’re rounding up daily purchases made with a debit card.
Acorns has five diversified portfolios that range from conservative to higher risk. You can pick and even change your mind later.
Most people pay $1 a month a fee. College students are free. And people with an account of $5,000 or more pay 0.25 percent in fees per year. Some promotions offer ways to avoid the fee.
Every dollar you invest is “automatically diversified across 7,000 stocks and bonds to help improve your return while reducing risk,” according to Acorns.
Acorns allows you to link as many debit cards, and credit cards, as you like.
Would you rather pick your stocks?
One 29-year-old I spoke with swears by using Robinhood. The Robinhood app promises free trades on many U.S. securities. But see the commission and fee schedule for other charges. For example, trading listed foreign securities end up being $50 a trade.
And there’s the app called Stash, which lets you start investing with as little as $5.
-Want to stay with a big brand name? Check your favorite bank or credit union.
Bank of America announced earlier this month that it was updating its mobile app to include features such as a new tool with gizmos to let you add pictures and dollar targets to track progress with saving for that new car or spring break.
Bank of America’s app also cuts out steps for ATM withdrawals, enabling “cardless” transactions at the bank’s ATM network. Bank customers can start the ATM withdrawal process from their mobile banking app.
-Want to avoid being scammed?
You want to only upload and install apps from well-known stores, such as Google Play, Apple App Store, Windows Store and Amazon _ even if some apps cost a few dollars, according to cyber security experts at PNC Bank.
The reason? Unfamiliar sources may spread malware. Or you could be unknowingly agreeing to turn over your personal information and digital footprint, especially if the site is offering apps for free when the same software costs a few dollars elsewhere.
Josh Yavor, director of corporate security for Duo Security in Ann Arbor, Mich., said consumers should consider how many apps they really want on their phones. It’s important to realize that the more financial apps you add, he said, the more companies have some access to your bank account information and other data.
“People need to decide what works best for them,” he said.
Yavor, 33, said he limits himself to a couple of payment apps to cover money he might owe family and friends. He’s also waiting for a really great excuse, or a birthday, to get an Apple watch to make it even easier to pay and go.
ABOUT THE WRITER
Susan Tompor is the personal finance columnist for the Detroit Free Press.