What Is Debx?

By J.R. Duren
HighYa Staff Published on: Mar 29, 2018

Debx is a free personal finance app available for iOS users that automates daily payments from your checking account to your credit card that pay off your purchases.

The app’s function is based on the concept that keeping credit card balances low improves your credit and using your credit card enables you to earn rewards, something that debit cards can’t do.

Debx is the creation of a team of four founders: Ben Psillas (CEO), Chad Crutchfield (Head of Growth), Purvesh Patel (CTO) and Tim Klanke (COO). The four men founded the company in September 2016 and launched the app in March 2018.

We talked with Psillas to get a clearer picture of why he created the app and what makes it unique. Psillas said that the app allows users to get credit card rewards but pay purchases off every day as if it were a debit card, which, rather than using credit to pay for things, uses money from your checking account.

“I have always had a love-hate relationship with my debit and credit cards. When using my debit card, I liked the fact that the money came out of my account that day but was always bummed that I didn’t earn any rewards, consumer protections or was building credit when using my debit card,” Psillas told us.

So, he created Debx to merge the best of debit cards and credit cards. We’ll talk about this throughout this review as we help you understand what the app does, how it benefits your credit and how it compares to other options out there.

How Debx Works

Signing up for this app is a matter of connecting a checking account and your credit cards so that Debx can work its magic and pay off your card every day.

The application process is similar to that of other personal finance apps like Digit and Birch because it doesn’t require you to submit your birthday or social security number. Debx is concerned about paying your cards and doesn’t need a ton of your personal information to do it.

According to their website, the app can connect to checking accounts from more than 9,000 banks. Credit cards, however, are limited to the major players:

  • American Express
  • Bank of America
  • Capital One
  • Chase
  • Citi Bank
  • Discover
  • HSBC
  • U.S. Bank
  • USAA
  • Wells Fargo

Once you’re signed up for the app and you’ve connected your accounts, you’ve got two main features you work with on a daily basis: Autopay Limit and Shutoff Balance.

Autopay Limit is what you use to limit which purchases Debx pays off and which ones it doesn’t.

For example, if you have a 0% interest period on your credit card and you’re making a huge purchase you intend to pay off over time, then you probably don’t want Debx paying off the purchase even if you’ve got the money to do so. Autopay Limit allows you to avoid this by barring Debx from paying it.

Debx DashboardDebx Dashboard

If you’re worried that Debx might overdraw your account, you use Shutoff Balance to halt automatic payments if your checking account falls below a certain dollar amount. For instance, you could tell Debx not to make any credit card payments if your balance falls below $500.

In the event that Debx makes a payment that overdraws your account, their FAQ page says they’ll reimburse you for the fee.

As far as the payments go, Debx says that the app adds up all your purchases from the day before and then makes a transfer from your checking account to your credit card every morning.

Now, keep in mind, the app is only going to pay purchases that have been posted, not those which are pending or may change. So, for example, purchases you make on a Saturday may not actually post until Monday night.

To clear up any confusion, Debx provides something called “True Checking,” which is a running balance of your checking account funds that reflects posted and pending credit card transactions.

Pro tip: You can connect multiple credit cards to your checking account via Debx.

How Does Debx Benefit Your Credit Score?

Debx is, based on our research and effective tool for strengthening your credit because it pays your credit card every day.

You see, one of the most influential factors used to calculate your credit score is something known as “utilization ratio,” which is a technical term that means: the percentage of your balances related to your credit limit.

So, if you have a credit card with a $3,000 balance and the card’s credit limit is $5,000, then your utilization ratio is 60%.

Credit bureaus use scoring calculations that frown on utilization ratios of 30% or more, so, in the scenario we just presented, your score would suffer because of that 60% balance-to-limit ratio.

Debx helps you with your utilization ratio because your balance would never go up if you allowed the app to pay off all purchases every day.

At the same time, the app is teaching you how to only spend what you can pay for. It’s easier, mentally speaking, to ignore your credit card balance if you’re only paying it once a month. However, when you’re making daily payments, it forces you to watch your spending more closely.

The final benefit of using Debx is that, by paying off the purchase you make every day, you’re less likely to carry a balance on your card. Now, as we pointed out earlier, carrying a balance can have a negative effect on your credit.

Aside from that, though, carrying a balance results in interest payments. Imagine having a rewards card like the Chase Freedom Unlimited, which earns you $375 worth of rewards every year if you spend $25,000 on your card.

Now, let’s say you carry a $3,000 balance every month and your card’s interest rate is 17.24%. You’ll end up paying $517 in interest, which is $142 more than what you’ll earn in rewards.

Now, the other factor to consider here is that credit card companies report your balances to the credit bureaus before your due date, which means that, even if you pay your balance in full on your due date, your credit scores may not go up because the bureaus are using data that is a week or two old.

How Debx Compares to Other Personal Finance Apps

While we haven’t found another app that works quite like Debx, we have encountered one app in particular that uses debt consolidation to pay off your balances: Tally.

We’ll explain how Tally works, then talk about how its philosophy differs from Debx and which app might work best for you.

As we pointed out in our review of Tally, the company buys up your credit card debt and then helps you pay off that debt by using in-house algorithms to determine a monthly payment.

The advantage to this method of credit card payment is that it can pay off at least one card in a lump sum, which will reduce your utilization ratio.

The drawback to credit card refinancing is that the interest rates you offered may not be as good as the rates on your cards, especially if your credit has gotten worse since you signed up for the credit cards in question.

Also, you’ll be charged an origination fee of between 3% and 5% of the balance that’s transferred to Tally.

This is basic debt consolidation philosophy; use the app to buy out your credit card debt and then make one payment to Tally.

Debx uses a different philosophy, one that we’ll call the daily payment philosophy. It won’t necessarily help you if you’ve already got a balance, but, in our opinion, it can at least stop the bleeding caused by overspending and bad habits.

If you have no balances at all, Debx ensures that those balances will stay at or near zero because it’s paying everything off every day (unless you tell it not to).

Both of these philosophies help your credit score.

The Final Word: Pros, Cons and Who Debx Is Good For

Based on our research, we believe that Debx’s strength is that it takes advantage of the credit-boosting powers of daily credit card payments. If you’re used to carrying a balance on your credit cards and paying them off every month.

We like this because it almost guarantees that your balance will be low when your credit card company sends your balance information to the credit bureaus.

We believe the downside to Debx is that it won’t necessarily increase your credit score if you’re already carrying a balance on the cards you connect to Debx.

The app will definitely help you avoid increasing your balance, but unless you make extra payments every month, which you can do through the app, you’ll be saddled with a balance that may be dragging down your score.

Another drawback is that the app isn’t available for Android phones. At the time of publishing, however, Debx’s website said they’re developing an Android version of the app.

We believe this app is best suited for someone who has low or no credit card balances and wants to keep it that way.

However, we think it could also be a useful tool for someone who has enough income to earn more than they spend and wants a tool they can use to keep their credit card balances at their current dollar amount while the cardholder comes up with a plan to pay down their balances.

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