Basically what the title says. I'm aware that i could use char as type if i only had one letter, but i need a datatype for 2 letters, e.g "XY". Is there anything that uses less storage (bit) or is smaller than a String? Or are multiple letters generally just saved as Strings? Thanks!
If you are sure that there are no higher-unicode characters (i.e. characters that use more than 1 char to store) in use, there are a few options:
As mentioned by @rdas, you could use an array: char[2]. This would be a bit more memory-efficient than a String, as the String has additional members. If it's only ASCII-characters, you could even use byte[2].
As one char is 16 bits, 2 chars are 32 bits, so could also try to encode the 2 characters into 1 int, as this also uses only 32 bytes, and you would not have the object overhead of the array. Clearly, this requires some additional steps to encode/decode when you need to show the stored information as actual characters, e.g. when presenting it to the user.
If your characters are only ASCII codes, i.e. every character fits into 1 byte, you could even fit it into a short.
Depending on the number of two-character combinations that you actually need to support, you could actually just enumerate all the possible combinations, use a lookup Map or sorted Array, and then only store the number/index of the code. Again, depending on the number of combinations, use a byte, short or int.