Debitize is a new tool that lets the credit-shy reap the rewards and credit-building benefits of credit cards without (as much) risk of going into debt. Our review.

Americans under 35 are less likely to have credit cards than just about any other demographic. Many don’t have them because they fear going into debt. In a survey we performed last year, a third of respondents who didn’t have a credit card said they were too scared of the temptation a credit card would bring.

This makes sense. Many young adults came of age during the financial crisis, and probably saw their parents—or the parents of their peers—experience the horrors of too much debt. They see sticking with debit cards as the prudent way to go.

But avoiding credit cards comes with costs of its own.

Without a credit card, it’s harder—if not impossible—to build credit. Debit card usage doesn’t get reported to the credit bureaus. In a few years, those debit-card-only users may find their cautiousness and thrift rewarded by finding it difficult to get a mortgage.

It’s also difficult—if not impossible—to rent a car with a debit card.

Debit card users also miss out on hundreds of dollars a year in potential credit card rewards they could earn from everyday purchases.

Finally, credit cards offer enhanced fraud prevention features and return protections that many debit cards don’t.

Enter Debitize, a new product that aims to soothe our anxieties about using credit cards.

With Debitize, you link your checking account and any credit cards you want to use. Then, as you make purchases with your credit card, Debitize moves the money out of your checking account just as if you made the purchase with your debit card. That means you’re never spending money you don’t have. At the end of the month, Debitize pays your credit card bill out of your account.

Debitize is only a tool, however, and ultimate responsibility rests with you. If you’re set on spending more than you’ve got, Debitize alone can’t help you.

How Debitize works

With Debitize, you set up a checking account, and then add as many credit cards as you’d like. It tracks your spending, and moves money from your checking account to your Debitize account to cover any charges you’ve made.

Debitize’s deductions are done via ACH—i.e. the same way many of us pay our credit card bills. In my experience, it takes a couple of days for these transactions to go through. So it’s important to note that the money isn’t pulled out of your account in real time as it would be if you made a debit card purchase. Increasing the speed of these transactions would go far in making Debitize an even more helpful tool.

Debitize sets up protections to keep your money safe, but they can also be used for ill.

If you’re worried Debitize might overdraw your account, don’t. Within Debitize, you can set up a minimum balance, and Debitize won’t make withdrawals if doing so would drop your balance beneath that minimum. (It’d be a good idea to have your minimum be your Bank Account Buffer™.)

That’s why Debitize isn’t a foolproof way to protect yourself from overspending—it has safeguards that keep Debitize from overdrawing your account, but no way to make sure you don’t keep racking up credit card charges once your bank account is wiped out.

Debitize also gives you some much-needed flexibility to exempt certain transactions so they aren’t deducted from your checking account. That way, if you do need to make a big purchase and pay it back over time, you can do that.

But it also means you can order pizza on Friday night (even if you know you don’t have the funds to cover it) and then just exempt that purchase from Debitize’s deductions. If you’re truly skittish about your spending habits, Debitize might not be enough for you.

Update

Debitize has now moved to weekly payments to users’ credit cards instead of monthly.

The main reason behind this change is that many people asked for it, but it also allows Debitize to support many of the cards (including American Express now) they previously couldn’t.

There were also previously reported problems with Discover cards not being accepted if it was a new card with no outstanding bills, but this has been resolved and Discover cards were always and continue to be accepted with Debitize.

Debitize has also launched a pilot of their free automated debt repayment program—Debt Destroyer. Debt Destroyer is built to help you pay down your credit card balance and stay debt free.

Debt Destroyer automatically covers any future purchases to keep you on top of your spending, but now they will also lower your credit card balance from month to month by making additional automated daily, weekly, or monthly payments to your card. Debitize has already paid off more than $3 million in credit card balances for their users through Debt Destroyer!

Who should use Debitize

If you’re wary of credit cards, but want to build credit and earn rewards, then Debitize is an additional safeguard against overspending and going into debt.

Debitize is not perfect, and there are still kinks being worked out. Not all credit cards are yet supported—my Discover card wasn’t, for instance. I also had trouble getting my Simple checking account set up with Debitize. I eventually had to use another checking account I have with USAA, though Debitize eventually helped me work the Simple account, too.

There are some things I wish were easier—for instance, you can’t switch your checking account in one fell swoop. You’ve got to delete the existing one first, then add a new one in a separate action, adding extra steps that don’t need to be there.

Debitize’s support, however, was top-notch and very responsive—I had answers to my questions within an hour, and usually a solution within a day.

Without delays, Debitize will be that much better

One thing I hope they’ll get to working on soon, however, is the speed with which money is taken from one account and put into another. It currently takes a few days, or at least it did for me.

The promise of Debitize is heavily reliant on the almost immediate transfer of funds from your checking to your Debitize account. The current delay just adds more confusion to the state of your finances—what’s cleared and what hasn’t? How much money do you actually have?

Once that’s gone, I think Debitize will be a great thing for a lot of wary credit card users.

Who shouldn’t use Debitize

If you’re comfortable with credit, and don’t have the urge to overspend, then you probably don’t need to add another intermediary to your finances. Sticking with an expense tracker like Penny, or Personal Capital should be enough to keep your spending in check.

That said, if you don’t overspend but also don’t want to bother with paying your bills every month, then Debitize’s deduct-and-pay system might mean less hassle in your life.

Summary

Debitize can be a great help for young people who want to build credit but who are wary of going into debt. That said, it’s not foolproof, and can’t eliminate all temptation to spend what you don’t have.

Learn more about Debitize or try it now

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About the author

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Lauren Barret is a staff writer at Money Under 30. She has an MFA in creative writing from The Ohio State University, and a BA from Kenyon College. She lives in Portland, Maine.