What Is Debitize?
Debitize is a third-party financial tool that pays your credit card bill on your behalf and, by doing so, ensures that you never fall behind on payments.
Every time you pay for something with your credit card, Debitize recognizes the transaction and withdraws an equal amount of money from your checking account and saves it. When it comes time to pay your credit card bill, you’ve already got enough money saved up to cover the balance.
What makes Debitize unique is that there are very few products like it on the market today. There are dozens of investment “robo-advisors” that automate the investment process and there are plenty of websites that offer free credit scores and credit-score tracking.
However, there are very few that do what Debitize does.
Debitize started in 2015 when founders Liran Amrany and Jeff Hu launched a beta version of the app. At that point, the only users were those Amrany and Hu selected and it wasn’t available to the general public.
Amrany’s current venture isn’t surprising considering his background in financial services. According to his LinkedIn page, he was an executive director at J.P. Morgan from 2004 to 2013.
Debitize seems like a great idea and Amrany has relevant experience, but will the app be a good fit for you? That’s the important question here, and that’s what we want to find out through a solid examination of the following topics:
- How do you sign up for Debitize?
- How does Debitize actually work?
- How does it protect your information?
- Are there fees for using Debitize?
- Who would benefit from this app?
We’ll finish up this review by considering how the app can help the average credit card consumer, a section that’s based on our research of credit scores and credit card usage.
Pro tip: Debitize is only available on desktop and mobile browsers and is not available in Apple and Google’s app stores.
How Do You Sign Up for Debitize?
Adding Debitize to your arsenal of financial tools only takes a few minutes and you can do it on a desktop or mobile browser and through the app, which is available for Android and Ios.
Account creation follows four steps: Creating the account, linking your credit card, adding a funding account and verifying your identity.
The entire application only takes a few minutes and, once your identity is verified and your application is processed, you can start using Debitize.
When we asked Jeff Hu what that verification process looks like and he said that Debitize will ask you for the last four digits of your social security number, your address and your date of birth.
“The primary reason is that we need to validate that you are indeed the account owner of the checking account that you link with us is for your protection,” Hu said. “We're also under federal regulations to make sure there's no money laundering and other illegal activities, so that's why we collect the information for this step.”
How Does Debitize Work?
We read through Debitize’s FAQ and went a few pages deep into their application process just to get an idea of how everything works.
Basically, here’s what happens. You give Debitize permission to access your credit card information and your payment account (most likely a checking account).
They then are able to keep track of every credit card payment you make. Whenever a charge pops up on your credit card account, whether an automatic payment or an online or brick-and-mortar, Debitize recognizes it and then makes a withdrawal from your payment account that matches what you charged.
That payment goes into a holding account with a U.S. bank called a “Debitize Reserve Account”. The money accumulates in that account until it’s time for you to pay your bill.
We chatted with co-founder Jeff Hu to learn more about how Debitize processes bill payment, mainly because we were concerned that Debitize might pay your bill late.
Hu said that Debitize usually schedules your credit card payment 10 days in advance of your due date “so even in the case that our processor is late, we usually never pay after the due date itself.”
While the process seems neat and tidy, there are things that could go wrong. For example, what if Debitize overdraws your account? What if you have an emergency and need to withdraw money from your checking account but there’s not much left because Debitize has been saving your money for your upcoming payment?
The way that Debitize solves that is by giving users the ability to set a minimum balance for their payment account. So, if you wanted to make sure that you always had $500 in your checking account, you’d tell Debitize your minimum amount is $500.
If there’s ever a situation in which a credit card transaction would take you below that amount, Debitize does a partial withdrawal.
Let’s say you’ve got $510 in your account and spend $20 at the gas station. Debitize will only withdraw $10 to make sure your minimum balance is met.
Also, if you find yourself in a situation where you don’t want to pay off your entire balance at once, you can tell Debitize to only pay part of the balance.
The same goes for big purchases – you aren’t forced to transfer the purchase amount to your Debitize Reserve account.
Pro tip: Your Debitize Reserve Account isn’t locked. You can transfer money back to your payment account if you need to, the Debitize website says.
How Does Debitize Protect Your Information?
Debitize employs industry-standard 256-bit encryption security measures to protect your account information and your money.
According to their site, they never store your bank login credentials on their servers, which means that information wouldn’t be sitting around if someone happened to hack Debitize’s servers.
If there’s any unusual activity happening, Debitize will alert you. Also, the app requires ID verification to log in and automatically logs you out when you’re inactive.
Are There Fees for Using Debitize?
Debitize does not charge any fees for their credit-card payment service. They do charge $3 a month for their Credit Optimizer tool, which is designed to help you boost your credit scores.
Who Would Benefit From Using Debitize?
Based on our research of credit scores and consumer credit habits, we believe Debitize can be a good tool for several groups of people.
First, we think this app would be a great fit for anyone who consistently has more income than expenses. If that’s the case, then you’ll never have to worry about not having enough money to cover your credit card payment.
Second, we think this app can be an excellent tool for credit card churners. “Churners” are consumers who apply for credit cards only for the up-front rewards, then dump the card once they’ve gained all the perks.
Since churners tend to use several credit cards at one time, Debitize is a great way for them to have all their bills paid without a second thought. But, again, Debitize is at its best when you’re earning more than you spend.
The final group of people who would benefit from Debitize is those who are trying to strengthen their credit. The Credit Optimizer tool we mentioned earlier pays your credit card balances every week, which means your balances stay low.
The reasons this is important is that the overall balance of your credit cards in relation to your total credit limit is the second-most important factor in determining your credit score.
Paying off your balance every week ensures that ratio stays low – less than 30% is the goal. So, if you had a credit card with a $6,000 limit and, at the end of the billing cycle, your balance always hovered around $4,000, then your credit scores would suffer because you’ve got a balance that’s 66% of your credit limit.
However, if you paid off your balance every week, then, if your expenses are the same every week, the highest your balance would ever get would be $1,000, which is less than 20% of your limit.
Is Debitize Right for You?
It’s tough to figure out if a new app is a good choice for your financial life and we certainly aren’t going to tell you what you should do about Debitize.
What we can say, based on our research, is that the tool works best for people who have a little breathing room in their budget and can pay off their credit card bills without hesitation each month.
If you are spending more than you make, then Debitize may not be the best idea because it essentially defeats the purpose of the app by only paying part of your credit card balances.
The situation in which we think this card could help someone who doesn’t have more income than expenses is the matter of on-time payments. If you tend to be really forgetful, then Debitize pretty much guarantees that you’ll make your payment – whole or partial – on-time.
Whether or not Debitize is a good fit is up to you, but we will say this: When you use the app to make your payments and add-on Credit Optimizer, Debitize is a powerful credit-boosting tool.
And make no mistake – boosting your credit scores is one of the most powerful weapons you have in your financial arsenal.
We write extensively on the topic of credit scores, covering everything from raising your credit scores fast and how to build good scores to comprehensive guides about credit scores, credit bureaus and how to compare free credit score websites.
Each one of these articles walks you through the basics of the topics and shows you how they directly affect you, the consumer.