In a Nutshell: When a lot of little credit card purchases get together, they can add up to a big balance — often without you even realizing it. Rather than ditching your card, retrain your habits with Debitize. Designed for those who swipe-and-forget with their credit cards, frequently miss a due date, or just want more control over their credit card spending, Debitize helps your credit card act more like a debit card by automatically withdrawing the funds to cover each credit card purchase as you go. To top it off, Debitize is adding financial management features like utilization optimization and the ability to pay off existing balances. Launching early in 2017, the current, fully functional version of Debitize is in open beta.
It happens without warning, a little at a time, over the course of days and weeks, so slowly you hardly notice. Then, one day, Bam! — you get your credit card bill and see you’ve spent way more than you intended.
Those little everyday purchases we all make have the bad tendency to add up, and they do so more quickly than most of us realize. Combine those with a handful of larger items, and, by the time the bill comes, you could easily be shocked by — and completely unprepared to pay — a giant balance.
A large number of people looking to eliminate the threat of overspending with a credit card have opted to use debit cards instead. They find eschewing credit card benefits, such as rewards points and rental car insurance, in favor of the extra level of spending control to be worth the trade.
This behavior was exactly what inspired Liran Amrany to create Debitize, a platform that helps your credit card behave like a debit card. It works by taking funds from your checking account when you use your credit card and stashing them away to pay off your bill at the end of the cycle.
“I had two friends who, within the span of a week, told me they were switching from credit to debit,” he said. “I just didn’t see any benefit to that, but they liked that the money came out right away. That’s when I had the idea, ‘Why don’t we build something to do that for credit cards?'”
It took some time for Liran to find the right person to help him build the company, but eventually he met Jeff Hu, who had the same vision for the product and company as Liran. Together the team worked on building Debitize, and the real fun began. Debitize is in open beta right now.
“The beta version is fully functional, and we’re getting a lot of feedback that we’ve been incorporating,” said Liran. “We hope to fully launch early next year.” The product continues to grow along the way, adding new features as they get feedback and experience.
Purchase-by-Purchase Withdrawals Let You Maximize Credit Rewards While Staying Debt-Free
So how does Debitize make your credit cards change their ways? It doesn’t. It just works around them.
“Once you sign up, you link your checking and credit card accounts,” Liran explained. “Then, whenever you make a purchase with your credit card, we withdraw the same amount from your checking account. At the end of the month, when the bill comes in, we’ll pay the bill — on time.”
The money Debitize removes is set aside in another account, solely for that purpose. Don’t worry, though, because you own the account — Debitize has no claim on the account itself.
“Say you buy a pair of jeans for $100,” described Liran, “we’ll take $100 from your checking account, and put it into your Debitize account. If you then spend $40 at dinner, we’ll transfer another $40 to the account.”
You can set limits on your checking account to ensure you never overdraft, and always have enough to get by. If you need cash for an emergency, you can transfer funds back into your checking account from your Debitize account.
“We want to help people use credit responsibly, so they can get their rewards and build good credit,” said Liran, “but we also want to help them stay out of debt, and avoid late or missed payments. Debitize gives you the discipline of a debit card, while still taking advantage of the perks of a credit card.”
There’s no worrying about security, either, because your money lives within a closed circuit, where money can only move between your checking, credit card, and Debitize accounts, with no ability to transfer money outside the circuit. Additionally, they use security specialists to store your information, and high-level encryption to send it.
“We never store your login credentials,” confirmed Liran. “We use a company called Plaid, whose business is security — it’s what they do. We also send everything with 256-bit encryption, which is more than some banks.”
Always See Ideal Utilization with the Credit Optimizer
Though the product may have started as a simple way to avoid the pain of unexpected auto-pay balances by treating credit card purchases like debit purchases, Debitize is much more.
For starters, because Debitize is taking the money out of your checking account, you can track your credit card purchases just as you would those made with a debit card. Another added feature, this one inspired by beta users, is what the team calls the Credit Optimizer.
“We heard from a lot of people who wanted to make multiple monthly payments, to keep their credit utilization low,” Liran explained. “So what we do is pay down your balance right before your statement, which is when most banks report your utilization. We pay it down to about 1% of your line of credit, optimizing utilization.”
Your credit utilization, or the amount of debt you have versus the total amount of available credit, counts as 30% of your credit score. Reporting some balance is good — it shows you use the card — but having a high utilization rate can drag down your score.
After your bill is issued, Debitize pays off the remaining balance. “Using the Credit Optimizer, you won’t pay any interest or late fees,” said Liran, “but you’ll still show some balance on your statement when the banks report to the credit agencies.”
For users who already have a credit card balance when they join or have a situation that results in the accumulation of one afterward, Debitize is working on the Debt Destroyer, which allows users to pay down existing debt through their Debitize account.
Users will be able to set a monthly payment amount and track how long it will take to pay off their debt. If you don’t have enough to make your usual payment that month, you can change the settings at any time. Plus, with checking account minimums, you can always keep what you need on hand.
“We let you tell us when to take out the funds, and how much,” Liran said. “It’s all on your terms.”
Debitize Goes Mobile, and Other Future Developments
Getting through our daily lives requires a lot of purchases, but when those little expenses add up to big balances at the end of your credit card billing cycle, it can be a big — and expensive — shock. Debitize is a good way to help take control of your spending and manage your credit cards wisely.
The team is hard at work preparing for their launch in 2017, but they’re already thinking about the future and the big plans they have for Debitize.
“Our ultimate goal is to automate good financial habits,” said Liran. “We’re starting with credit cards, but we also want to expand beyond that. Eventually, you’ll be able to use Debitize to pay not just your credit card, but your mortgage, your loans — all of your expenses.”
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.