Wallet Hacks

How to Use Credit Cards with a Debit Mindset — Debitize Review

Review of: Debitize
Price:
Free

Reviewed by:
Rating:
3
On June 8, 2016
Last modified:February 22, 2018

Summary:

Turn your credit cards into a debit card for free.

Credit cards are a fantastic financial tool. You can earn credit card rewards for using them, you can build your credit score over time, and you get liability protections and other credit card perks.

But like any other tool, there are benefits as well as drawbacks.

If you can't use credit responsibly, you can become mired in credit card debt that can wipe all those benefits away.

So when I started speaking with the founders of Debitize, a startup that seeks to use technology to help give you the benefits of credit while the mindset of debit, I was intrigued to learn more.

Philosophically, I believe credit cards are a fantastic tool and much more useful than debit cards.

But I get it when people say they don't trust themselves. It's too easy to spend on credit!

It's too easy to spend more than you have and fall into that financial death spiral. So when folks tell me they don't trust themselves, I don't have an answer other than to support debit cards… even though they're not as good.

I think Debitize could be that answer.

What is Debitize?

The founder and CEO, Liran Amrany was a nine year veteran of the financial services industry before founding Debitize. He was an Executive Director at J.P. Morgan in the area of credit and was often a source of financial advice for his friends. One of the biggest challenges so many folks face is credit card debt and he wanted to build a service that would give people all the benefits of credit but the responsibility of debit — that's how Debitize was born.

Debitize is a service that monitors your linked credit card accounts for transactions and makes small transfers from your checking account to cover those expenses into your Debitize account. When your bill is due (technically, 1 week before it's due), it is automatically paid by Debitize from your Debitize account. Your Debitize account is held through Synapse, their ACH processor, and each user's sub-account is at an FDIC guaranteed institution, up to $250,000.

For example, let's say you buy $50 of groceries. After the transaction posts, $50 is transferred from your linked checking account to your Debitize account. When the statement is due, Debitize makes the payment on your behalf from your Debitize account.

All throughout this process, Debitize keeps you up to date on everything it's seeing and doing on your behalf through a series of alerts.

So it's very much an approximation of a debit card, since your checking account will reflect the cost of your transactions, even though you're using a credit card at the register.

There are a few caveats to this approximation:

  • Your transaction won't be rejected at the register. If you spend more on your credit card than you have in checking, you won't be rejected at the register. In this sense, it's not a true debit card. This may be a future feature.
  • You can set a minimum checking account balance, that Debitize will maintain. The default is $100 but you can set the minimum checking account balance to whatever you'd like — Debitize will not transfer any amounts that lower the balance below that number. If you set the minimum to $500 and you have a balance of $550, the most Debitize will take out is $50.
  • Debitize will try to “catch up,” if, as a result of your minimum balances, your credit account falls behind. Debitize will always try to get your credit card balance down to $0 and when it falls behind, it will continue to try to catch up with transfers if you have funds above your minimum balance.

A Peek Inside…

As of this writing, Debitize is in private beta (request an invite) but I wanted to give you a peek into what things look like on the inside.

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Clicking on each of the menu items gives you a breakdown of transactions, your notifications, and account management.

The notification settings is where things get interesting, especially if you have credit cards that don't offer notifications:

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Right now you can get notified for a low checking account balance, a large transaction, as well as when your bill is scheduled and the weekly summary.

Your weekly summary includes a check in on your checking, Debitize account, and credit card accounts — extremely useful for good credit management and much easier than logging into your credit card accounts each week.

(click to enlarge)

As the beta progresses, and more features are announced (I've heard of a few of them, they're clever and useful), I can see this tool being instrumental for folks who want to use credit cards but don't necessarily trust themselves and want a little technological safety net.

Request an invite to Debitize

Turn your credit cards into a debit card for free.

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