Many people use credit cards to get rewards and points. Some cards offer cash back on everyday purchases, while others offer great travels perks, like free checked bags and access to airport lounges.
Still, the reality is that every credit card comes with one potential pitfall — debt. A possibility so real that Americans currently owe more than $1 trillion in credit card debt.
It might be tempting to just avoid credit cards altogether, but that would mean foregoing rewards. A new app aims to give people another option.
Debx is an app that lets users automatically pay off credit card purchases right away by linking the card to a checking account. Simply put, as long as you have the money to cover your expenses in your checking account, users can earn credit card rewards without worrying about racking up debt.
Entrepreneur Ben Psillas launched the app last year after looking for a way to remedy one of his biggest pain points.
“Every time I used my debit card I had this negative reaction because I wasn’t getting any points or rewards,” he told Yahoo Finance. “I love my credit card rewards, but I didn’t like paying off a large monthly bill. I knew there had to be a better way.”
Here’s how Debx, which is free, works: You link your your credit card to your checking account. Next, you set some payment rules. One option is to have Debx use your checking account to automatically pay all credit card purchases under $100. This means that all purchases above $100 would stay on your credit card, and you could pay off that balance at the end of the month.
In addition to making daily payments, the app will also remind you when your credit card bill is due, and offers a shut-off valve, which prevents overdraft by stopping automatic payments when your checking account balance gets low.
Is it safe?
At a time when data breaches and mobile security are constantly in the headlines, Psillas assures users that all personal information will remain confidential and protected.
“We’re light in what we ask for from customers,” he said. “We don’t see your bank account information, we don’t see your credit card number, and we don’t ask for your date of birth or Social Security number,” he said.
Instead, all transactions are processed through a third-party service called Plaid, which specializes in connecting customers and banks by verifying identities and authenticating accounts. Other Plaid customers include Venmo and Acorns.
While there is no fee for the app, Psillas says that a profit is made by making recommendations through intelligent ads. This means users will see ads for things like cheaper, more efficient checking accounts, credit cards with a lower interest rate, or options for debt consolidation. The suggestions will be made in the app and through notifications that can be turned on or off.
“Debx will suggest products and services that would benefit you, so if you spend $500 with food and entertainment, we might suggest another card that would generate more points for you,” said Psillas.
Brittany is reporter at Yahoo Finance. Follow her on Twitter @bjonescooper.