As longtime readers know, I was in credit card debt back in the day. I didn’t have a spending problem, I had personal issues and spending was my way of dealing with the issues I didn’t want to face. Buying things made me feel good, so I kept buying even though I didn’t have the money.
Fast forward and I got real with myself and paid off my debt once and for all. But I still had scars. I was scared to use credit again because I was afraid that I would start overspending once again. And I’m not alone.
A recent study shows that 33% of millennials fear debt too. But using credit cards is a lot safer than using a debit card for purchases. The main reason is because you are not liable for fraudulent credit card purchases.
In other words, if some scammer goes on a spending spree with your credit card, you alert your credit card issuer, they deal with the bad charges and offer you a new credit card. You are not out any money.
But with a debit card, the story is different. The money comes from your bank account. So if a scammer goes on a spending spree and drains your bank account, you are left with paying overdraft fees. And you won’t have any money to pay your bills.
Of course, once you alert your bank and they confirm the charges were fraud, they will reverse the overdraft charges and refund your money. But this takes time.
I know because this is what happened to me. When I was too scared to use my credit cards, I used my debit card. Well, somehow my card number was stolen and I was out $500. I paid overdraft fees and didn’t have any money to pay my mortgage or my electric bills because I was living paycheck to paycheck.
I ended up getting a loan from the Bank of Mom and Dad. I did get my money back, a whopping 3 months later!
Not wanting to go through this scenario again, I slowly began using my credit cards. I only wished there was a way to use my credit cards and not have to worry about getting into debt.
This was over 10 years ago and thanks to technology, there is a way to use your credit cards and not worry about getting into debt. It’s called Debx.
What Is Debx?
Debx is a free personal finance app that pays off your credit card purchases as they happen. The result is you never have to worry about getting into credit card debt.
Here is why this is awesome. Let’s say you are remodeling a room in your house. You head to the local home improvement store a few times over the course of the month and spend $400 in total.
During this time, you are busy with life and forget about these purchases, or worse, don’t realize that they total up to $400. When your statement comes in the mail, your jaw hits the floor and you scramble to make sure you have enough cash in your checking account to pay the bill.
With Debx, you never deal with this situation. As you make each purchase, the Debx app pays the bill by taking money from your checking account.
Here is a quick look at how to get started.
Other Benefits To Debx
There are other benefits to using the Debx app as well.
As we all know, having a solid credit score is the key to getting the lowest interest rate on mortgages and car loans. And the lower your interest rate is, the more money you save over the life of the loan.
Debx helps you to have the highest score possible. How is this? Part of having a high credit score is making payments on time and having a low debt to credit ratio. By using Debx, you will always be paying your bill on time and you will be keeping your debt to credit ratio as low as possible.
The result is a higher credit score for you and more savings when it comes time to take out a loan.
Another benefit of Debx is earning cash back and rewards. I love using my credit card and earning cash back on every purchase. I then use my cash back and invest the money to grow my wealth.
Others who love to travel use credit cards to amass rewards points so they can travel essentially for free. In both cases, you can easily get caught up in overspending to earn more cash back or rewards points.
And sadly, this is the goal of the credit card companies by offering these deals. But you don’t have to worry about overspending since money is coming right from your checking account to pay your bills. You will see you don’t have enough money to buy something just by looking at your current checking account balance.
Finally, one other major benefit to using the Debx app is that all of your credit cards will be accessible in one location. So if you have multiple cards tracking multiple cash back or rewards, you won’t have to log into each site just to see your balances.
Instead you just log into the Debx app and you can see everything, saving you time.
Is Debx Secure?
Debx is secure. They use 256-bit encryption that most financial institutions use to protect user data. Furthermore, they never store any of your usernames or passwords on their server and they never have access to your money.
They are simply a middle man that moves money from your bank account to your credit card accounts to pay your bills.
Frequently Asked Questions
Here are some common questions I get asked about Debx. If your question isn’t answered below, feel free to reach out to me and I’ll get the answer for you!
What do I have to do to use Debx? In order to start using the Debx app, all you need to do is download the free app, link your checking account and your credit cards and Debx will do the rest.
There are some additional features that Debx offers that you can set up as well, like Autopay Limit and Shutoff Balance, which I discuss below.
Do I have to pay all transactions immediately? No. With the Autopay limit, you can decide what transactions get paid right away and what ones don’t. This is great for large purchases where you might not have enough cash in your checking account to cover them.
For example, we recently bought an upright freezer. In this case, I would use the Autopay limit to not pay this transaction, since the money for this purchase is in a savings account. I would manually transfer the money to my checking account and pay this amount when my credit card bill arrives.
Do I have to open a new bank account? No. Debx works with over 9,000 banks. At the moment, they are focusing on the biggest banks like Wells Fargo, USAA, Bank of America, Capital One and others.
They are adding support for other banks all of the time.
Do I run the risk of overdraft my checking account when using the Debx app? No. You can set up Shutoff Balance when you set up your account with Debx. This tells them to stop paying transactions because your checking account balance has reached a limit you don’t want to drop below.
If you don’t set this feature up or the Debx app somehow does overdraft your account, Debx will reimburse you the fees your bank charges you.
How much does Debx cost? Nothing. It is free to use Debx.
At the end of the day, Debx is a great tool for you to add to your arsenal. They help you to avoid getting into credit card, help you build your credit history, and earn cash back and rewards points for using your credit cards, all for free.
I encourage you to look into this tool if you are scared to use your credit cards. Debx helps you to be a responsible spender and not have to worry about living beyond your means.
You can read more about Debx here or download the Debx app on iTunes.