Tuesday, 24 November 2020

Tally App Review

Tally App Review
18 Nov
7:29

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It’s no secret many Americans have credit card debt. The Federal Reserve reported that as of August 2018, Americans carry a total of $1.04 trillion in revolving credit card balances.

Tally, an automated debt manager, aims to make it easier for those with credit card debt to pay down their debt faster and save money while doing it. The fintech company behind the Tally app, Tally Technologies, was founded by serial entrepreneurs Jason Brown and Jasper Platz.

“We created Tally to help people overcome credit card debt and the anxiety that comes with it,” Brown told MagnifyMoney.

What is Tally?

In simplest terms, Tally is an automated debt manager. With the aid of algorithms, automation and a line of credit, Tally says it helps consumers pay down their credit card debt faster, reduces the costs related to carrying credit card debt and minimizes the emotional stress of debt management.

The free Tally app launched in 2017 for iOS devices. The company released a free app for Android devices in September 2018.

How does Tally work?

Tally acts as the middleman between you and your creditors. You make one payment to Tally each month and Tally uses that money along with your Tally line of credit to make payments on your credit cards at least two days prior the due dates. Tally prioritizes paying off your most expensive debts — the highest balances with the highest interest rates — to save you money in interest payments along the way.

You Pay vs. Tally Pays

For each of your credit cards, you have the option to decide if you want Tally to pay the bill on your behalf using your Tally credit line (Tally Pays) or if you would like to manage the credit card payments on your own (You Pay).

If you elect Tally Pays, then Tally will pay your cards using the Tally credit line.

Cards with rates higher than the rate on your Tally credit line: Tally will pay as much as possible toward the balance with your Tally credit line, so you can repay Tally at a lower interest rate.

Cards with rates lower than the rate on your Tally credit line: Tally will make only the minimum payments.

Tally will then send you one bill. It first uses your payment to cover the minimum payments (minimum payments are not added to your credit line balance), and your remaining payment goes toward paying the principal and interest on the line of credit. Tally does not compound interest. You must pay at least the minimum payment on your Tally line of credit, but you can pay more if you wish. Tally told MagnifyMoney its average customer pays 2.5 times the minimum each month. Tally charges a minimum payment equal to the greater of $25 or at least 1% of the total balance on your credit line each month.

Tally does not charge a fee if you go over the Tally credit line limit. You won’t be charged, for example, if your minimum payments send you over the Tally line of credit limit.

With You Pay, using Tally gets a bit more complicated. Tally reminds people using You Pay to pay their credit cards a few business days before the bills become due. You have the option to pay through the Tally app using funds in a linked checking account or pay directly on the creditor’s website. If you use the Tally app to make the payment(s), Tally will show an estimated date of payment arrival.

If you use the creditor’s website, Tally recommends making the payment at least seven business days ahead of the due date to avoid double payments with late payment protection. Tally’s system needs the time to register that you made a payment. If the system can’t detect you made a payment close to the due date — even if your card is set to You Pay — Tally will still make a payment if you have late free protection enabled. For that reason, the company recommends those who pay through a creditor’s website disable its late fee protection to avoid double payments.

Eligibility

While anyone across the U.S. can download the app, as of this writing Tally is only licensed to serve consumers in 16 states: California, Texas, Florida, New York, Illinois, Ohio, Michigan, New Jersey, Washington, Massachusetts, Wisconsin, Colorado, Louisiana Minnesota, Utah and Arkansas. If you don’t live in one of those states, you can sign up to be notified once Tally is available in your state.

You must be 18 years or older to use Tally’s services, and as of this writing, only those approved for a line of credit are eligible to use Tally. Tally requires a minimum 660 credit score and conducts a soft pull to determine eligibility, so your credit score isn’t harmed if you apply.

Tally’s service is two-part: Tally Advisor and a personal line of credit. (Again, you can only use Tally Advisor if you qualify for the line of credit.)

Tally Advisor

  • Analyzes your debt
  • Tells you which cards to prioritize
  • Encourages you to pay down your debt faster

Tally Advisor is the app’s automated debt management feature. It analyzes your credit card balances, spending habits and goal debt-free date to recommend a monthly payment amount. Tally Advisor also shows you how much faster you can get out of debt by paying more each month.

Image via Tally

Line of credit

  • Personal line of credit for consolidating debt
  • Pays your cards with the highest APRs first

Tally issues a line of credit it will use to help you save money on high-interest credit card debt. Tally charges a variable interest rate between 7.99% and 19.99% APR on the line of credit. Your credit limit and APR on a Tally credit line will be determined by the information obtained using a soft credit pull and other factors, like your card balances, interest rates on your credit cards and spending habits. Tally reevaluates your profile every six months and may offer you a higher line of credit or a lower interest rate.

If you elect Tally Pays, the line of credit automatically consolidates high-interest credit card debt at a lower rate. Tally monitors your card balances, interest rates and due dates, so you don’t have to keep track of which cards it’s consolidating. Considering the average credit card charges 16.5% APR, it’s likely you would save money using Tally’s line of credit.

Tally will automatically use the credit line to pay your credit card balances with APRs higher than the line of credit’s APR, and then you will pay down the line of credit. Once space is freed up on the line of credit, Tally will use it to pay debt from the card with the next highest APR and so on, as long as it saves you money in future interest payments.

For the cards with interest rates below the rate charged on your Tally credit line, Tally will only make minimum payments. Tally says it does not use the line of credit to make minimum payments; rather, it plays middleman by repaying your credit card issuers using the payment you make to Tally.

Cost

  • The Tally app is free to download.
  • Tally doesn’t charge any fees to use the app or any maintenance fees associated with the personal line of credit.
  • You pay interest on the line of credit used to consolidate debts, which is how Tally makes its money.

Is Tally secure? Tally transmits all information through secure SSL encryption and does not store any bank usernames or passwords. In addition, Tally does not store sensitive information on your phone.

Our thoughts on Tally

What we like about Tally

The automated debt avalanche

Tally follows the debt avalanche method. It prioritizes and pays off your credit card debts in order of interest rate, from highest rate to lowest rate, ensuring you pay off debts in the order that saves you the most money.

A credit line using a soft pull

Tally uses a soft credit pull to determine your eligibility for a line of credit. The number of credit inquiries, or hard pulls, on your credit report comprises 10% of your FICO credit score, and having several hard inquiries for new credit can damage your credit score. Since a soft credit pull isn’t factored into credit scoring formulas, applying for a Tally line of credit won’t damage your credit score.

Late fee protection

Tally provides late fee protection. It promises never to miss or make a late payment, as it pays your cards at least two days before the due date. Tally also promises to refund late fees if it makes a mistake.

Improve your credit score

Tally told MagnifyMoney that the majority of its users see an increase in their credit scores after signing up.

The app’s services focus on both ensuring on-time payments and paying down credit card balances, targeting the two factors that make up 65% of your FICO credit score: payment history and credit utilization. Payment history determines 35% of your FICO score, while credit utilization — the amount of credit you use out of your total amount of credit available across all your revolving lines of credit — makes up another 30%.

No fees

Tally does not charge any fees for its services. There is no origination fee on the line of credit and it does not charge a late fee if you miss a payment or make a late payment. Although you wouldn’t pay a fee, Tally does report payments to the credit bureaus.

Willing to work with you

If you miss a payment with Tally, the company’s customer success team will reach out and try to work with you to customize a payment plan, Brown told MagnifyMoney.

“As long as they will collaborate with us we will come up with a plan to work with their situation,” said Brown. However, he added that if someone isn’t willing to communicate or collaborate and refuses to pay, Tally will be forced to turn the account over to collections.

After a user misses two payments and they are unresponsive, Tally begins the collections process.

No compound interest

Most credit cards accrue and compound interest daily. The Tally line of credit accrues interest daily but does not add it to your principal balance.

What’s not so great about Tally

It’s complicated

If Tally approves you for a line of credit large enough to cover all your credit card debt and at a rate that’s lower than all your credit card rates, it’s easy to understand how Tally saves you money — it’s simple debt consolidation.

It gets confusing if your Tally line of credit can’t cover all your debt. The idea with Tally is you don’t have to worry about it — Tally automates the debt-payoff process to save you money — but the bite-by-bite debt consolidation by way of a middleman is difficult to envision. It also makes it difficult to know how much debt you have, because until it’s all consolidated, you’ll continue to get bills from multiple creditors. You have to remember that Tally will distribute all your payments appropriately.

It’s particularly complicated if any of your credit cards have a lower APR than your Tally line of credit, because you will hit a point at which you’re merely using Tally as a payment intermediary. When that happens, you’re likely better off setting up automatic payments with your credit card issuer.

Limited availability

Tally is currently only available to residents of the following 16 states: California, Texas, Florida, New York, Illinois, Ohio, Michigan, New Jersey, Washington, Massachusetts, Wisconsin, Colorado, Minnesota, Utah, Louisiana and Arkansas.

Brown tells MagnifyMoney the company aims to be available in all 50 states by the end of 2018. He adds the states where Tally is already licensed to operate are home to nearly 60% of the American population.

Not for subprime borrowers

As of this writing, those who fall below the minimum required 660 FICO credit score cannot use Tally. While the average FICO score may be 700, about a third of U.S. consumers have scores that fall below 660 and would not be able to take advantage of any of Tally’s features.

Avalanche isn’t for everybody

The debt avalanche method helps people save the most money in the long run, but not everyone finds this approach motivating. Even though it doesn’t save as much money, the debt snowball method (paying off small debts quickly) gives some people the momentum they need to get out of debt.

Doesn’t discourage spending

As Tally consolidates your high-interest credit card debt with the personal line of credit, it frees up space on your credit card. Seeing your credit card bill go down — even though the debt has merely moved to a different creditor — may tempt you to keep spending. And because Tally may not pay off all your credit card balances immediately, it can be hard to tell how much debt you have and how much you’re adding to it by continuing to use your credit cards.

Not the best rates

The high end of Tally’s rate range on its personal line of credit (19.99%) is higher than the average APR on credit cards. The low end of the range (7.99%) is competitive, but borrowers may be able to qualify for a better, fixed rate with a personal loan.

Maxed out line of credit

Even though Tally doesn’t perform a hard inquiry on your credit report in the approval process, using Tally can still affect your credit. The company reports your line of credit activity to the credit bureaus. Because using Tally may not consolidate all your debts immediately, you will have more revolving accounts with outstanding balances, which can hurt your credit score. And because the credit line is designed to consolidate as much of your credit card debt as possible, you will have a maxed-out revolving credit line on your credit report (also not great).

Who Tally is best for

Tally’s services may be appealing to those who have been unsuccessfully trying to dig out of credit card debt, carry a balance most months and find it difficult to manage multiple credit card payments.

For those struggling to get out of debt, Tally comes up with a strategy and takes action automatically. The app sorts and pays off your eligible credit cards in an efficient way. All you need to do at that point is make one payment to Tally each month and avoid putting more debt on the credit cards.

How to sign up for Tally

To sign up for Tally, you must first download the app. You create an account in the app by entering your:

  • first and last name
  • email address
  • password
  • mailing address

Tally then asks about your credit rating. You can choose from four options:

  • excellent
  • good
  • fair
  • rebuilding

Then, Tally asks you to scan in your card information, which you can do using the camera on your mobile device.

Note: Tally currently does not support some retail store cards and the camera has some difficulty scanning the card if the numbers are on the back.

In the event you have trouble scanning the card, you can manually enter the card’s number.After scanning the cards, you must link the accounts by entering your login information for each creditor.

Then it’s time to see if you qualify for a Tally line of credit. You must be at least 18 years old and have either a Social Security number or an equivalent ID number. Enter your date of birth, phone number and income, then agree to a soft credit pull to see if Tally approves you for a line of credit.

If you do not qualify: You can ask to be notified when Tally expands to cover users who are not approved for a line of credit. You can also choose to close your account at this point, given you can’t use any of Tally’s features if you’re not approved for a credit line.

The bottom line

If you want to better manage your debt, Tally’s features may help you learn to be a better credit card user. However, if your goals are to save the most money on your debt payoff and simplify your repayment, a personal loan may be worth considering as an alternative to Tally. Here are a few reasons why:

  • If you have the required minimum 660 FICO score to qualify for line of credit with Tally, you may also qualify for a personal loan.
  • You could use the personal loan to consolidate your credit card debt right away instead of in chunks, like with Tally.
  • Consolidating all of your debt right away at a lower rate could save you money as your debt is immediately removed from your high interest credit card(s).
  • A personal loan generally carries a fixed interest rate as opposed to Tally’s variable interest rate, so you will have the same payment each month. This isn’t guaranteed with Tally.
  • A personal loan has a fixed repayment term, so you know the exact date you’ll be done with your debt, which may help to motivate your payoff.

Additionally, a personal loan may carry a lower rate than the Tally line of credit, so it’s worth shopping and comparing your terms with multiple lenders before you decide. In either case, you have to be serious about getting out of debt, or else you run the risk of racking up more debt if you use up the newly available credit on the consolidated cards.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea

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Source: https://www.magnifymoney.com/blog/reviews/tally-app-review/

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