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Can Savings Apps Actually Help You Retire Well?

As lawmakers debate the dueling tax plans put forward by the Senate and House, the spotlight remains on 401(k) accounts, the nation's favorite way to save.

A recent survey on America's savings habits showed that 57 percent of respondents had less than $1,000 stashed away, a 12 percent improvement from last year. In addition, the number of Americans with zero money in their savings was down five percent since 2016.

Famously frugal millennials are leading the way with savings; this year almost 40 percent of the 18-34 age group said they would sock away their tax return — as opposed to just 23 percent of Gen Xers.

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A reflection of this attitude can be seen in the growing interest in apps that help store away money in barely noticeable amounts.

College senior Jeremy Quijano has been using the Acorns app for the past two years. Acorns withdraws small amounts of money from your checking account — sometimes mere pennies at a time — and puts the cash into various stocks, bonds and funds.

Even though Quijano also has a savings account at his bank and some emergency funds set aside, the simplicity of the app appealed to him.

"I saw that this app would round up your debit card spending, and I just set it and forget it," he told NBC News.

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Similar apps include Betterment and Stash, which have more traditional ways to deposit funds that will then be invested in a portfolio. Qapital and Digit are more akin to savings accounts, but with the option of small withdrawals from your checking account at varying intervals.

However, while these passive savings accounts are easy to set up and use, financial experts advise saving more than a few dollars a week for your future.

"If you're just putting in your spare change, chances are you won't hit your retirement goals," said Deacon Hayes, founder of WellKeptWallet.com. "When people are looking at these apps, they should look at the option for saving extra money in order to hit their savings goals."

New users should consider a few options before jumping into one of these passive savings apps:

Does my bank offer a similar service?

Wells Fargo offers Way2Save, and Bank of America has a Keep the Change program, both of which will take small amounts from a checking account and move it to savings.

Although these options may not be as hip as the apps, they don't have additional fees to make use of them. Acorns has a monthly fee of $1 for accounts under $5,000. That may not seem like a lot, but if the monthly amount deposited is $20 then the fee translates to 5 percent. Digit recently added a fee of $2.99 a month, causing many to cancel their accounts.

What are these savings for?

Financial experts advise people to have two kinds of savings: one for retirement and another for emergencies. Hayes advises 20-somethings like Quijano to save at least $400 a month in order to have more than $1 million saved by retirement age. For an emergency fund, it's recommended to save enough to cover two to three months of bills and other expenses.

While these apps are not the best options to plan your retirement, they can help save money for emergencies — although it will take some time. Alternatively, the amount saved can build up nicely for purchases such as a new smartphone, a holiday fund, or vacation spending.

Is this app making full use of your money?

In the case of Acorns, Stash, and Betterment, the apps have fairly limited options when it comes to return on your investment. Digit and Qapital pay interest similar to a bank.

"I've never had to take any money amount of my Acorns account," said Quijano, "But I have been thinking lately on whether I am taking full advantage of the money I've saved."