Tally is an iOS financial app that helps you gain control of your credit cards by making strategic payments based on balances and interest rates, saving you money on interest payments.
Tally was started in 2015 by Jason Brown and Jasper Platz, two entrepreneurs with backgrounds in venture capital and technology. Their San Francisco-based company made headlines in 2016 when it closed a round of $15 million in fundraising.
According to a TechCrunch article, investors liked Tally because they provided a solution for everyday problems that consumers face. As we’ve pointed out in other articles, there are more consumers who carry balances on their cards than those who pay off their balances or don’t use them at all.
With all that debt floating around, it seems that a service like Tally could be a huge help. But, is it as beneficial as they say it is? We wanted to figure out exactly how the app worked, how much it could cost you in the future and whether or not it’s as beneficial as they say it is.
To understand exactly how Tally works, we researched all the information available about the app on its website, as well as poring through the fine print.
How Tally Works: Paying Your Credit Cards
The problem that Tally is trying to address is common. You’ve got three or four credit cards, each with their own credit limits, balances, APR’s and due dates.
Do you have all of them on auto-pay? Is it just one or two? Do they send your due date notices to the right email address or street address?
Answering no to any one of these questions can put you at a serious disadvantage and end up costing you late payments – between $35 and $37, usually – and interest rates that average anywhere between 15.99% and 24.99%.
And what’s worse is that some credit cards have a “penalty APR,” which means one late payment will send your APR to 29.99% either for six months at a time or permanently.
Their solution is the app: You tell them which credit cards you have and give them permission to access your accounts.
They then take a look at your balances, monthly payments, and interest rates. From there, they determine a repayment strategy that will help you save money in the long run.
In most cases, according to their website, Tally will ask you to open up a line of credit in order to use the app.
The Tally Line of Credit
A “line of credit” is a financial term that means a company has approved you to borrow a certain amount of money (credit limit) that you can take advantage as frequently or as seldom as you’d like. You only have to repay the line of credit if you use it.
Basically, a credit card is a fancy type of line of credit. So, why would you need another credit-card style financial product like what Tally is offering?
The answer to that question gets right to the heart of how Tally claims they can help you.
Here are the basics of how this works. Tally performs a credit check to see how you’ve been doing with your current/past loans, credit cards and other financial products. If your credit scores are below 660, you won’t be approved.
However, if you qualify for a Tally line of credit, you’ll be informed how big that line will be and, according to their website, the interest rate will be somewhere between 7.9% and 19.9%.
Now, remember, a line of credit isn’t a loan that goes straight to your bank account when you’re approved. It’s pretty much like a new credit card that’s specifically designed to make payments on your existing credit cards.
Now, let’s get to the important question: How could this new line of credit help you?
Well, let’s say you’ve got a credit card with a balance of $4,000 and the APR is 19.99%. You got the card when your credit scores were lower, hence the high APR. But, now, your scores are much better: beyond 720, in fact. You ask your credit card company to lower your APR and they say no.
You are now stuck with interest payments that could be as high as $66 a month. You don’t want to pay that much each month. You need a lower rate. That’s where Tally comes in. Since you’ve got good credit, there’s a good chance you can get the lowest rate: 7.9%.
That reduction in interest could save you more than $40 a month in interest payments, which is an amount you could be using to pay down that $4,000 balance.
Tally’s Methods for Paying Your Cards
According to Tally, their app will take determine how much you pay on each card based on the card’s interest rate.
There seems to be an emphasis on paying off credit cards with the highest interest rates first, the reason being that doing so saves you money.
They’ll crunch the numbers on your behalf and then notify you how much they’ll pay on your cards. Unless you choose to pay the cards directly from a checking account, Tally will use money from your line of credit to make the payments.
Then, they’ll send you a due date for the payments you make on your line of credit. Basically, what’s happening here is they’re acting like your credit card accountant, running around making sure everyone gets paid on time so you can avoid late fees.
Everyone once in a while they’ll suggest you pay off a bigger chunk of a high-interest balance so that you can get on the fast track to saving money on interest payments.
But, the real question here is a matter of value. Does Tally offer you something that you need to use?
Is Tally Worth Using?
Here’s the deal. Tally is a, basically, another credit card you’re using to make payments on your existing credit cards. The catch is that their interest rates are lower than what you’d get on a low-APR credit card you’d use in place of Tally.
What we mean by that is that one of the popular ways to control high-interest credit cards is by signing up for a card offering 0% APR on balance transfers.
Let’s play this out with the $4,000 balance we were using earlier and let’s assume you’ve got good credit; good enough to get 7.9%.
You’d save roughly $40 a month purely based on the lower rate that Tally is charging you. What’s important to remember, though, is that Tally is actually charging you 7.9% on top of the 19.99% you’re paying.
What does that mean for you? It means you’re paying 27.89% interest on your debt just to pay it down faster.
Grand total at the end of one year, assuming you pay off that $4,000 debt with Tally: $629.72 in interest payments to your credit card and Tally.
If you signed up for a card like the Citi Simplicity, which has 18 months of 0% APR and no balance transfer fee, you’d end up paying nothing in interest or fees if you paid your balance off in 12 months.
Our Final Thoughts About Tally
Based on our research, we believe that Tally’s line of credit may not be the best fit for consumers with good credit who are looking to leverage their high scores to get a low-interest credit card they can use to pay off their existing balances without being charged interest.
We think that there are multiple credit cards out there that can do a better job of helping you pay down high-interest cards: the Citi Simplicity, Chase Freedom Unlimited and the Quicksilver from Capital One are just three examples.
And consider this: The Freedom Unlimited and Quicksilver offer $150 bonuses that negate the fee you’d pay to transfer a $4,000 balance.
Now, to Tally’s credit, the majority of their presentation of the app focuses on having someone who can make your 3-4 monthly credit card payments for you. You don’t have to worry about late fees or penalty APR’s.
That’s a nice perk considering that you probably have a different due date for each credit card.
Also, Tally strategically makes your payments by focusing on the balances with the highest interest rates.
In the end, the real question is: Is Tally the right app for you?
If you consider yourself absent-minded and are a chronic late-payer, then Tally could be worth the extra percentage you’re paying on your Tally line of credit.
However, if you aren’t overwhelmed by your credit card payments, this app probably isn’t a good fit for you. You have the option of paying your credit cards from your checking account and not the line of credit, but that puts you right back where you started before you considered Tally.
Check out our reviews of the credit cards we mentioned earlier (each has a link to their review) to find out how those cards can help you pay off your balances. Also, read through our guide to budgeting; it lays out the principles you’ll need to be proactive in paying off your debt.