With many young adults wary of credit cards, a fledgling digital tool aims to help them build credit while protecting themselves from getting mired in debt.
The New York Times reports Debitize, an online tool that will be available as a mobile app later this summer, works to convert a credit card into what amounts to a debit card with benefits.
Customers need both a checking account and a credit card. Then, they register online for Debitize and link both the bank account and the card to the tool.
Debitize tracks credit card spending and pulls cash from your checking account when you make purchases using the credit card. The money is held in a separate Debitize account—an F.D.I.C.-insured account at a bank that works with Debitize—and the tool pays the credit card bill automatically when it’s due.
Card balances are paid monthly, or, for a $3 monthly fee, they can be paid weekly, which helps to keep card “utilization”—an important factor in calculating credit scores—low.
Liran Amrany, Debitize CEO and co-founder, says the tool is another avenue for credit card weary millennials, more inclined to use pay-as-you-go debit cards, to build credit and earn rewards.
“To me, there’s no reason to use a debit card,” Amrany says. So when two of his friends told him that they were abandoning their credit cards in favor of debit cards, the need for a tool like Debitize was clear, he adds. “Why not pay for credit card purchases, every day?”
