We use credit cards to buy everything these days- groceries, drinks with co-workers, cat beds, gum, sweater vests and all the other things that make us happy.
Then the end of the month rolls around. Your bill comes, and you come to the dreaded realization that you blew your budget once again and your credit card bill is more than you can handle.
It’s happened to the best of us, but it doesn’t have to happen to you anymore. Introducing Debitize, a new way to pay off credit cards on time and responsibly. Today the guys talk to Liran Amrany, the CEO Debitize about how it works and the story behind it’s creation.
You can listen to the episode here:
What is Debitize?
Liran founded Debitize to help simplify, optimize, and automate personal finances, especially around credit card spending where he witnessed a significant need.
Two-thirds of Millennials avoid using credit cards mostly because they have seen debt negatively affect friends and family. However, building credit is important, and Liran wanted to create a tool to help people use credit responsibly.
Before founding the company, he was an Executive Director at JPMorgan, where he spent nine years as a derivatives marketer, focusing on structured credit, exotics, and cross-asset hybrids.
After working on the institutional side of finance, he wanted to build something to make a real impact in the financial world and help people avoid credit card debt and better manage their money.
How does it work?
In a nutshell, Debitize automatically debits your checking account every day to cover your credit card purchases. The funds are temporarily held in your Debitize Reserve Account, and then they automatically pay your balance for you every week.
Yes, finally someone who will pay your bills on time for you and in full.
Using Debitize is very simple. First, you’ll need to activate your account and link your checking and credit card accounts on the Debitize site. You will do this by logging in with your bank credentials like you would with Mint. Once you’re all set up, you will only use your credit card to make purchases, not your debit card.
With Debitize, you get the best of both worlds. You can use your credit card as a debit card while still earning rewards and points credit card companies off. It will help you avoid spending money you don’t have and will keep your finances on track.
Debitize will send you a weekly spending summary and confirmations of scheduled payments to keep you in the loop. They will notify you when you have a low balance or if there was a large transaction on one of your cards.
Although they encourage you to pay your bills in full to avoid paying interest, if you are making a large purchase that you would like to pay off over time, Debitize will give you the flexibility to do so.
Get our best money lessons:
If you’re on the fence about using credit and fear getting into debt, Debitize is an excellent way to start building your credit. It acts as a safeguard against overspending. They make automatic withdrawals from your checking every day you make a purchase and set the funds aside to pay off your credit card bill.
Don’t worry about Debitize overdrawing your account. You can set up a minimum balance in your checking, so they won’t overdraw your account to make payments. Even if you don’t set up a minimum, they still will not overdraw.
This is our favorite feature. There is a credit optimizer feature that can help improve your credit. Debitize will pay down 1% of your credit line right before the card company send reports out to the credit bureaus. Lowering your balance before the reports are sent will lower your utilization and help increase your credit score.
They will automatically make additional payments on your outstanding balance to lower your credit utilization. Since that is the 2nd largest component of your credit score, this will also give your credit a boost.
Using credit keeps your cash safe. If you lose your debit card, it can take upwards of a week to get your funds returned. With a credit card, most companies iron out the issue within hours. For peace of mind when it comes to fraud protection, credit cards are the way to go.
As for security on Debitize, everything on their site is encrypted. They won’t store any of your information. Instead, they use Plaid which safely integrates with banks to gain access to your account information. Companies like Venmo, Betterment, and Acorns also use Plaid.
Do we like it?
Yes, we love it! When Liran told me about Debitize the first thing I said was “Where have you been all my life?”.
Debitize is an excellent way to help people feel more in control of their finances. Whether you are looking to start building credit or fix your credit, they will help you reach your financial goals.
It takes the fear out of using credit and gives you the peace of mind that your bills will be paid on time. It’s a great solution for people to struggle with using credit cards responsibility.
They have combined the advantages of using credit and with the advantages of using debit so you can stop worrying about debt and start building credit.
They are still in start-up mode and ironing out kinks so if you have any questions or issues their customer service is outstanding.
Getting started only takes about 5-10 minutes. You can sign up here.