Getting Out of Credit Card Debt Using Tally
Having credit card debt is one of the more stressful financial situations to be in. Credit card debt can be some of the most expensive debt with some of the highest APRs (interest rate charged over the year), service and late fees. As you get further behind (and miss monthly payments) the fees compound and this can seriously hurt your credit score. Thankfully there are a few services out there that are designed to help you pay down credit card debt or lower your APR. Companies like Tally track your credit cards, advise you on how to pay them off faster and also offer loans to consolidate debt. There are also credit card consolidation loans and personal loans to help tackle the problem.
How does Tally work?
Tally is an app that aggregates all your credit card payments and debt into one app. They take care of due dates for payments and watch things like variable card APR. They help you pay your cards off in the most optimal way to save you the most money.
The basic version, which costs $5 a month, helps you monitor your credit cards and pay off the higher APR cards first. Tally’s aim is to help you build better credit by making a payment plan that is optimised to target FICO score factors. In other words Tally knows how to improve your credit score with small targeted payments at the right time. This service also works on lowering your APRs by helping you improve your FICO score.
Tally Express is available if you have a 580 FICO score or better. The way it works is they give you access to a low interest credit line and pay off all your credit card debt as soon as you’re approved. So you’re left paying one cheaper consolidated loan and not a bunch of credit cards. They charge $25 a month for this but it’s prepaid from the line of credit they give you. This once off payment can typically bump your credit score up.
What does Tally charge?
Tally’s lines of credit have an APR of 7.9 – 25.9%, the rate is variable and based on the prime rate similar to normal credit card interest rate. Whilst this seems high, the biggest saver is that there are none of the fees that accompany a credit card. Tally boasts that they can save you an average of $5300 of lifetime savings.
How does Tally make money?
Tally makes money from the annual fees and the charges from their loans, since they have much lower costs than credit card offerers (banks with a lot of products that don’t earn a lot and huge numbers of staff) they still make decent money offering a lower cost loan.
Pros and Cons of Tally?
Advantages of using Tally:
- i) You can still make use of your credit card rewards and bonuses. Tally doesn’t require you to cancel your cards, you can still use them (sparingly) to keep up your perks.
- ii) Tally’s makes it easy to work out which bill to pay first (if you haven’t taken their consolidation loan.) So you don’t have to work out the most efficient way to pay back credit card debt.
Disadvantages of using Tally:
- i) Tally is only available in 31 states and Tally Express is only available in Colorado, Idaho, Indiana, Iowa, New Mexico, Oregon, Utah, and Washington.
- ii) Tally doesn’t stop you from racking up further debt, if you’re having trouble overspending you need to work out how to budget to stop yourself going further into debt.
How does Tally compare to a personal loan or balance transfer?
It really depends on your circumstances, a 0% balance transfer can be an excellent tool to get out of debt, but they also come with hooks. The main variables are the amount of debt that you have and your credit score. Taking a look at all the options:
Balance Transfer: usually charge no interest for 21 months and then a possibly very high variable APR, they often charge 3-5% of the money borrowed in origination fees. Also it can hurt your credit score if you max out the balance of the new card so it’s typically only an option for smaller amounts of debt.
Tally
Personal Loans: charge 5-10% APR but also include origination fees of up to 6% of the amount borrowed and can often have other fees. The interest rate is significantly lower than Tally so can be the right call if you have a good credit score and the amount isn’t so large that the origination fee isn’t too hefty. So a personal loan can be right for you if your credit score is better than average and your debt isn’t in the tens of thousands.
Tally: charge 7.9-26% APR but have no other fees. Tally can be a great intermediary tool away from credit card debt to a cheaper personal loan. The benefit is it can help you increase your credit score quickly (so you get a better rate on a personal loan.) Tally is typically good for those with more debt and with more ‘average’ credit scores.
What are Tally’s reviews?
Most users really love Tally , the most common review is that Tally helped them improve their credit score significantly especially when paying off all their debt with their consolidation loans. The Chicago Tribune reviewed Tally and came to the conclusion it saved their reviewers an average of $200 of interest in two years. Most of the negative reviews are from businesses who said it wasn’t as useful for them or from users that complained that their customer service wasn’t great. Only 7% of reviews were 1 star.
Wrapping Up
Tally is a great tool in the arsenal of tools to get out of credit card debt, it may only make sense to use Tally short term and really depends on how much debt you have and your credit score. If you have more than 2 credit cards then we’d definitely recommend dipping your toe in the water with their basic plan first.
Author – Alex Beck is the founder of Clarafinds.com a fintech comparison site to help people find and compare the best new finance products.
