Debitize Review – Free Tool That Helps You Avoid Credit Card Debt (Bonus Expired)

Update: $20 sign up bonus is no longer valid. 

Debitize is a relatively new web based application (with a mobile application coming soon) that aims to help it’s users avoid credit card debt and better manage their money. The idea behind the application is to get all of the benefits of using a credit card (e.g rewards & zero liability protection) without the pitfall of overspending and going into credit card debt. Debitize was founded by Liran Amrany (previously worked as an Executive Director at JPMorgan) and Jeff Hu (Yale MBA). Each account is also individually insured by the FDIC for up to $250,000.

 

How It Works

The way that Debitize works is as follows:

• You link your credit cards to the application
• You link a deposit account (e.g checking account)
• Whenever you make a purchase on your credit card, Debitize will recognize the purchase and then pull funds from your deposit account and put those funds into your Debitize account
• When your credit card bill becomes due, Debitize will automatically pay your bill with the funds in your Debitize account. Debitize will pay your bill around one week before it’s final due date.

Additional Features

• Debitize will never overdraft your account. You can also set a minimum balance on your deposit account, for example the amount you need to pay rent or for day to day expenses.
• Ability to carry a balance. If for whatever reason you want/need to carry a balance on one of your credit cards, you can set this option up in Debitize.
• Debt Destroyer. This allows you to automate payments to help pay down debt over time as well as ‘debitizing’ your future purchases.
• Notification systems for any of the following:
  • Low balance
  • Large transaction
  • Weekly summary of spending & balances
  • Bill scheduled

$20 Bonus

As mentioned in the title of this post, Debitize have agreed to give our readers a $20 bonus for trying their application. The terms of the offer are as follows:

•  $20 credit will be applied to your Debitize account and paid towards your next credit card bill as long as there are other funds that have been set aside in your Debitize account by then. We really just want you to give us a real try — if you do and don’t think Debitize is for you, just shoot us a note.

I’m sure the Debitize team would appreciate constructive feedback about their application, so if you have any please share it with them. You need to use this link to get the $20 bonus. As always we don’t receive any financial incentives from Debitize, we’re passing the full bonus onto readers.

Downsides To Debitize

As with anything, there are always some downsides to using something like this. I have two main concerns:

• Security. Whenever you give sensitive financial information out, you create another point of failure. Debitize doesn’t store your bank details, instead they use a company called Plaid to connect to your bank accounts (same company used by Betterment, Venmo, Accorns, etc.) There is also no functionality for funds to be moved from person to person so if somebody did gain access to your Debitize account they couldn’t move funds out of the account.
• Funds transfer. Funds aren’t instantly transferred from your checking account, they wait until the next business day. It’ll then take an additional business day for the funds to disappear from your checking account. This could erroneously lead to people thinking they have more money than they do, especially if you go on a shopping spree.
• You can currently only link one deposit account. For our readers with multiple accounts due to bank account bonuses, this could be an issue. They do plan to add functionality for multiple checking accounts.
• Not all credit card issuers are supported. Out of the main card issuers, American Express aren’t currently supported. This added functionality relies on Plaid so it’s not possible to get a good timeline on when American Express will be added.
• Debitize accounts do not earn interest. Funds in your debitize accounts do not earn any interest, so you’re forgoing whatever rate you would get from you checking account. This is their current monetization model, but they plan to also monetize by sending curated offers to users.

Our Verdict

I really like the idea behind Debitize, I hate people paying credit card interest fees and getting stuck in that cycle of debt and I do think that Debitize will be extremely helpful to consumers not spending more money than they have on credit cards (at least for people trying to avoid getting stuck in this trap). I personally don’t have this problem as I intentionally keep my spending a lot lower than my income, but there are several friends that I will recommend this tool to.

There are some downsides to the application, but I think the Debitize team are aware of these downsides and are actively making improvements to the application. I hope readers will provide useful feedback to Debitize in the comments and take advantage of the $20 offer.