Debitize Review

Debt Review
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Credit cards are a fantastic financial tool if used responsibly. They offer a multitude of perks, benefits, and rewards.

But all of the potential benefits pale in comparison to the double-digit interest rates charged by the issuing bank. Credit cards simply do not make sense if you carry a monthly balance and are forced to pay interest on the debt.

This dilemma has led many individuals to champion debit instead of credit. A debit card is linked to your bank account, and when used for a purchase, automatically pulls the money from your account. Debit cards typically provide very few rewards or benefits, but are often used as a behavioral tool to limit spending.

Debitize was created to help bridge this gap, allowing individuals to use their credit card(s) like a debit card through the following series of events:

  1. Sign up for a free account, then link your credit cards and bank accounts through the secure online interface
  2. Use your credit card to make purchases
  3. Funds are automatically transferred from your bank account to your Debitize account after every purchase
  4. Your credit card bill is paid automatically using your Debitize funds

Using Credit (Instead of Debit)

We have multiple credit cards from each of the major banks, and we use credit to purchase almost everything that we need. Here are a few reasons why:

Cash Back – Many credit cards provide cash back on purchases, with some providing 5% cash back in specific categories. You miss all of this cash back when using a debit card.

Travel Rewards – Many credit cards provide generous signup bonuses that can be used for free travel. In the last year, we’ve visited Aruba and Thailand using credit card rewards. We are visiting Thailand again in a few months, flying in business/first class. All of these flights are booked with credit card rewards.

Credit Improvement – Responsible credit card usage always results in a better credit score over time. Building a solid credit history is increasingly important in our economy. For example, many insurance providers consider your credit when determining your monthly premiums. The interest rate on any loan also depends on your credit.

Fraud Protection – Any unauthorized charges are covered by the credit card issuer and forgiven.

Rental Car Insurance – Many cards provide primary or secondary rental car insurance for free.

Purchase Protection and Warranty Extension – Most credit cards provide warranty coverage that doubles the original warranty period. Some also provide protection against theft, accidental damage, etc.

I’m sure there are other benefits that I’m forgetting, but you get the point.

Debitize Review

If you want all of the credit card benefits described above, but have difficulty controlling your spending habits, Debitize offers a superb solution.

Here is a quick graphic explaining the Debitize process:Debitize Review Process

The first step is signing up for a Debitize account. The second step is securely linking your bank account and credit card. After that, Debitize can begin working.

In this example, I purchase $50 of gas with my credit card. After doing so, Debitize automatically debits my checking account the same amount ($50) and transfers those funds into a secure Debitize account. I then go and purchase $100 of groceries using my credit card. Debitize automatically moves $100 from my checking account into my Debitize account. As a result, I now have $150 charged to my credit card, $150 debited from my checking account, and $150 sitting in my Debitize account.

Debitize then automatically checks the statement date of my credit card and pays the full balance before the payment is due.

Debt Destroyer 

Debitize has launched a new automated debt repayment program.

In addition to the standard Debitize withdrawals that cover your ongoing spending, Debt Destroyer will help you pay down your credit card balance by making additional and automated daily, weekly, or monthly payments to your card.

Best of all, it’s completely free – no application or credit checks required.

FAQ’s

How do you know what bills are being paid at any given time?

The Debitize dashboard has a bills tab that shows you when Debitize is paying your next bill(s).

There is also a balances tab which shows the amount of each previous Debitize withdrawal, as well as the expected future withdrawals.

What if there isn’t enough money in the bank to cover a credit card purchase?

Debitize allows you to set a minimum balance in your checking account. If you fall below this amount, Debitize will stop working. For example, if you set the minimum at $500, Debitize will process until the account balance reaches $500, then stop working. This feature prevents Debitize from overdrawing your account.

If you continue spending on your credit card without sufficient funds in your checking/savings account, Debitize will not stop you. They will send a number of customizable warnings that alert you to possible overspending (including low balance, large transactions, weekly summaries, and upcoming bill payments), but your credit card will not be declined at the register. The Debitize team is currently working on a solution that would allow declines to happen (with your permission), but that feature is not yet live.

What and where is this Debitize account?

The Debitize account is a separate bank account that is FDIC insured up to $250,000. Your Debitize account is yours alone, and cannot be claimed by Debitize or it’s creditors.

What if you want to carry a balance on your credit card?

Debitize will allow you to specify individual purchases that will not be paid in full. If you have a large purchase you’d like to pay down over time, you can specify this in the Debitize dashboard. However, Debitize encourages you not to do so, since carrying a balance means paying interest.

Can you access the funds in your Debitize account?

Debitize encourages you to treat those funds as money already spent, since they are set aside to cover credit card purchases. That being said, if you run into hardship or need the money, you can request a transfer from your Debitize account to your checking/savings account. It is your money.

Debitize Security

Because Debitize requires you to input and link your financial information, security is a big concern for all parties involved. Debitize has taken the following measures to ensure your safety and protection:

  • 256-Bit encryption (verified and monitored by Symantec)
  • No external transfer capability – funds can only move between your checking account, your Debitize account, and your credit card(s). It’s a closed loop, and no one else has transfer access.
  • Your bank credentials are never stored on Debitize servers – Your login credentials are passed directly to your bank just once to link your account(s), and then permanently deleted.
  • Account safeguards such as automatic logout and ID verification

Debitize Review Summary

Debitize is a simple, straightforward solution for individuals who have trouble using credit responsibly. The program allows you to use a credit card just like a debit card, combining the best of both worlds.  As a result, you can take advantage of numerous credit card rewards and benefits without worrying about paying interest or getting into debt.

The market has needed this solution for quite some time, and I’m excited about future updates that bring additional features to Debitize.

DEBITIZE REVIEW
Summary
Debitize allows you to use a credit card like a debit card, providing a behavioral solution if you have trouble controlling your spending.
Features7.4
Total Cost9.5
Ease of Use9.3
Customer Support9
Strengths
Free
Easy to use
Weaknesses
None
8.8
Overall

Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

User Generated Content Disclosure: Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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Emma
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Emma

Thanks for the very informative article! I actually thought about their concept and I’m wondering why this debitize is not a big thing yet. It seems super helpful, especially for people who tend to forget to pay their credit card bills on time – me and I’m pretty sure there are many like me

Xyz
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Xyz

super cool idea. never considered it since I always pay in full each month but thanks for the link!

Jamie
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Jamie

I have been using cc for years and I enjoy all the rewards and benefits it offers. This is because I always pay on time and in full. Debitize seems interesting!

Gene
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Gene

Great review, per usual for you.
I just tried signing up, but we mostly use American Express cards, which are not supported at this time…

Thomas
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Thomas

Very interesting idea here, and thank you for providing the detailed overview.
Overspending via credit is not a major concern for our family, so this is of limited use for us. But Debitize could definitely help some families control spending while receiving all of the credit card benefits you mention.