When you’re struggling with debt it can be hard to make progress on other financial goals, like saving for a home or investing for retirement. Qoins is a new app that aims to help you pay off your debt more quickly by putting your spare change to work.
In this Qoins review, we’ll run down the details of the service and dig into whether or not it can help you improve your personal finance situation.
What Is Qoins? An Overview of the App
Qoins was conceived by CEO Christian Zimmerman shortly after he graduated from Georgia State University. He was using Digit — an app that automates savings (read my review) — and thought a similar app designed to help people pay off their debt might find an audience. The company was launched in 2017 and is located in Atlanta, Georgia.
On average, Americans make 70 financial transactions per month between their debit and credit cards. Qoins rounds up the amount of those transactions and applies the money it sets aside to your debt.
Sound familiar? Qoins has a similar premise to both Digit and Acorns.
Digit analyzes your financial transactions to determine how much money can be moved from your checking account to your savings account. Users can take that money and pay off debt, or do anything else they like with it — Digit doesn’t make that decision for you.
Like Qoins, Acorns uses the round-up system. But instead of using the spare change to pay down your debt, it’s invested in exchange traded funds (ETFs).
So, you can think of Qoins as a blend of those two approaches: it uses both automated savings and round-ups to help you get out of debt.
How Qoins Works: Round-Up to Pay Down
Creating your Qoins account is simple:
- You’re required to provide your name and email address, and to create a password.
- You’ll have to enter your cell phone number to receive a verification code.
- Once you receive the code, enter it (along with your date of birth and mailing address).
- You’ll also have to provide the last four digits of your Social Security Number.
Once you’ve set up your account, you’ll need to link at least one debit or credit card that you’d like to round-up from. You’ll also need to link a “funding account,” which must be a checking account — not a debit or credit card.
This is where many people start to get a little bit confused. If Qoins rounds up your debit and credit card purchases, why do you need to link a bank account?
The answer has to do with the mechanics of how Qoins actually works.
The concept of “round-ups” suggests that when you spend $1.50 on a cup of coffee, 50 cents is set aside. But Qoins isn’t technically rounding up your purchase; to do that, it would need to actually charge your card 50 cents — and it would have to pay the card processors (Visa, MasterCard, etc.) a small percentage of that transaction (just like the coffee shop has to pay a small percentage of the $1.50 it charged you).
Instead, what happens is that Qoins records your $1.50 transaction and makes a note that you had 50 cents in “spare change.” When that “spare change” reaches a total of $5, Qoins moves the funds from your checking account (i.e., your linked “funding account”) to a separate Qoins account (where it sits in waiting until it’s applied to your debt).
It’s important to understand this, because many people don’t realize using Qoins means they’ll be subject to periodic account debits, instead assuming the “spare change” will show up in their list of card transactions.
Note that in order to link your funding account, Qoins will issue a couple of micro-deposits. They normally hit within three business days, and you’ll need to verify the amounts to prove ownership and begin using the account to fund your round-ups.
Paying Down Debt with Qoins
Once you’ve linked a funding account, you’re ready to enter the information for the debt (or debts) you want to repay.
You can choose to apply your round-ups to one or more debts, and because Qoins sends your creditors paper checks, you can pay down anything that accepts physical payments — from credit cards to car loans to student loan debt and more.
It’s important to keep in mind that Qoins sends a paper check once per month. According to their knowledge base:
“We send out payments once per month, at the end of the monthly cycle for each linked payment. Each payment we send includes the total spare change that you’ve sent to us over the past month […]”
That means you do not get to choose the date your payments are sent.
Also, the fact that payments are issued in the form of paper checks means there’s mailing and processing time before the payments are applied to your account. As a result, Qoins is only practical as a way to make extra payments — not your minimum payments that are due each month.
Round-ups can be a slow path to paying off your debt — even if you make a lot of transactions each month.
They can also be unpredictable. Make a trip to Disney World where you use your card repeatedly over the course of a weekend, and you might find yourself setting aside more than you expected. While it’s always great to save more to pay down your debt, that unpredictability doesn’t align with every household budget.
If that’s the case for you, you can change your Qoins account to use “Smart Savings” instead of the round-ups feature. With Smart Savings, Qoins will use an algorithm to figure out how much you can afford to save every day. That amount will be within one of three ranges, which you can choose from:
Level One: $0.50 to $1.50
Level Two: $1.50 to $3.00
Level Three: $3.00 to $5.00
As with round-ups, the funds are deducted from your linked bank account once they reach $5.
Qoins Fees: How Much the Service Costs
Qoins charges a fee of $1.99 for each payment it sends.
There seems to be some confusion about this fee, so we want to make it clear: the $1.99 is not a flat monthly fee. If you’re paying 10 creditors through Qoins each once a month, it will cost you $19.99.
Whether or not that’s a good deal (or a terrible one) depends on a variety of factors — especially the amount of money you stand to set aside each month.
If you only accumulate $40 in round-ups per month — which is the average according to Qoins — that seemingly small fee of $1.99 (for a single creditor) works out to a fee of 5%. If you were to split that $40 between even two or three payment accounts, the fee on a percentage basis would be significantly higher.
So if you choose to use Qoins, the best approach is to use it to help pay down one debt at a time, ideally utilizing the stacking method — meaning you list your debts in order of highest interest rate to lowest, and work your way down the list.
Given the fee structure, should you even use Qoins at all? More on that below…
Qoins Pros and Cons
- Helps you save money with the specific intent of getting out of debt faster.
- Automates your debt repayment, making it harder to deviate from your plan by spending the extra money you set aside each month.
- Can improve your credit score by lowering credit utilization as you pay down your balance.
- The $1.99 per-creditor fee can be expensive — especially for those using the app to pay off multiple debts.
- Using round-ups makes it impossible to balance your checkbook and difficult to budget precisely.
- The unreliable nature of the postal system and paper checks, coupled with the inability to set your own payment dates, means Qoins can’t be used for managing your monthly payments.
- Qoins charges you for something you can do yourself (for free) — saving money and applying it to your debt.
However, with regard to that final point: you and I both know it’s not always that simple. Saving money, applying it to our debts, and doing so over and over each month can be difficult.
That makes Qoins a good option for…
People who struggle to pay more than the minimum monthly payment. If you want to get out of debt (and save thousands of dollars in interest), you need to pay back more than required on a consistent basis. Qoins can help with that.
But it might not be right for…
People who have a precise budget, a specific debt reduction plan, and the discipline to stick to both. If you’re already making headway on your debt, then there’s no reason to pay for this type of automation.
Frequently Asked Questions
Chime is an online bank that has a program that works similarly to Qoins for helping with debt repayment. When you set up a Chime spending account and opt into the automatic savings plan, each time you make a transaction with your Chime debit card the amount will be rounded up to the nearest dollar and that amount will be transferred to your savings account. Chime doesn’t make the debt payment for you, as Qoins does, so you’ll have to make the payment yourself.
Tally is a mobile app that extends a line of credit to qualified users, which the app uses to pay off credit card debt. Users can opt to let Tally make their credit card payments for them, and for those with more than one credit card balance, the app will prioritize the payments using the stacking method. If the interest rate on your Tally line of credit is lower than that on your credit cards, it can be a great tool to help you save money on your debt.
Yes. Qoins uses 256-bit encryption (bank-level encryption) to protect your financial information, and the money Qoins transfers out of your checking account is held in an FDIC-insured account before it’s sent to your creditors.
Qoins supports thousands of banks, credit unions, and credit cards for round-ups. If your bank is not among them, you can reach out to Qoins’ customer service with the bank’s URL and they will try to get the bank added to their catalog.
Round-ups will be withdrawn from your funding account (checking account) once they reach a total of $5, so it depends on how many transactions you make and the dollar amount of those transactions.
Qoins doesn’t store your bank account information on its servers; it only accesses the information when needed for round-ups and Smart Savings transfers. When doing so, it connects through the third-party platform Plaid, which is widely used in the banking and finance industry.
Users can use Qoins to pay multiple debts, but each payment to each creditor costs $1.99. It’s best to use the stacking method to prioritize your debts, addressing one at a time.
Users can pause their account any time they wish. Tap on the linked payment from the homepage and the three dots in the top right corner. When you’re ready to resume payments, you can unpause them.
To remove a scheduled payment to a creditor, click on the payment from the Upcoming Payments card, tap the three-dot menu and choose “Remove this payment.” From this section, you can send out a final payment or send the money back to your own checking account.
To delete your Qoins account, you must first delete all of your upcoming payments. To do so, tap on each payment from the Upcoming Payments card, tap the three-dots and select “Remove this payment.”
Any outstanding funds will either be refunded to your checking account or sent out as a payment to the creditor. If there are any pending withdrawals, the payments will be sent as soon as Qoins receives the funds and users will be notified via email.
Once your linked payments are deleted, contact customer service and ask that your entire account be deactivated. This can take up to two weeks.
Qoins App Review: Summary
Qoins can help you accomplish one of the most important financial goals there is: getting out of high-interest debt. And that’s certainly something I can get on board with. If you’ve tried and failed to get out of debt in the past, I’d certainly give Qoins a shot.
That said, the app makes a lot more sense for those with a limited number of debts — no more than three or four different accounts to pay off (and even then I’d focus on just paying off one debt at a time, therefore incurring only one fee). For those with more debts, there are going to be some bigger changes needed… changes that no app can help initiate.
If that sounds like you, read through this guide that outlines five realistic ways to pay down your debt.