Eliminating credit card debt is one of the most important things you’ll ever do financially.
It’s impossible to get ahead when you’re paying 15% or more in interest payments. And when you make the changes that need to be made to eliminate such debt, it has a domino effect on your futucre financial goals.
Building an emergency fund? Starting to invest? Saving for a car, wedding or a house? With the financial muscle you build by paying off credit card debt, you’ll have an easier time accomplishing these and other financial goals that are important to you.
That’s why you must eliminate your high-interest debt as soon as possible.
As a Certified Financial Planner™, when I first heard about Tally, I was intrigued. The majority of households in America carry a balance on their credit cards, and an app that can help people pay off that debt faster had my interest from the get-go.
In this Tally review, I’ll explain how Tally works, the pros and cons of the service, and some final thoughts on when it makes sense to sign up.
How Does Tally Work?
Tally (also known as Meet Tally) is an app designed to help consumers consolidate credit card debt in order to pay down debt faster. Tally extends a line of credit to those who are approved, which ranges from $2,000 to $20,000 with interest between 7.9% and 25.9% per year. Your rate will depend on your credit score.
Tally gives borrowers a revolving line of credit, so there isn’t a fixed-term or set monthly payment. Tally then uses this line of credit to pay off your credit card balances. If your line of credit is less than your total debt, Tally prioritizes payments according to interest rate, targeting the highest rates first.
There are two well-known debt repayment methods: the debt avalanche and the debt snowball. Tally leverages the debt avalanche method.
With the debt avalanche approach, you pay off the debt with the highest interest rate first and then work your way down the list.
With the debt snowball method, you pay according to the dollar amount of your balances, starting with the smallest and working your way up to the largest.
Both methods are legitimate. But if your goal is to get out of credit card debt while also reducing your total amount of interest paid, the avalanche method is the better choice.
How Tally Helps You Get Rid of Credit Card Debt
Signing up for a Tally account and getting started is fast and easy. Before you begin, gather any cards you want to consolidate, the usernames and passwords for those accounts, and the username and password for your checking account.
How to Sign Up for a Tally Account
When you sign up for Tally, you’re asked for the same information as when signing up for a credit card. That means you’ll need to be prepared to give them your name, annual income, birthdate and Social Security number.
After doing so, Tally will perform a soft credit check; this is similar to when you’re shopping around for insurance, or for the best rates for refinancing your student loans — it does not impact your credit score.
In order to be approved for a line of credit from Tally, you’ll need a credit score of at least 660. It’s worth noting that while that’s not a super high threshold, it’s also not a particularly low threshold — about one third of Americans have a credit score below 660.
If you’ve struggled to make your credit card payments in the past — and especially if you have accounts in collections or accounts that have been recently charged-off — there’s a reasonable chance that your score will miss the mark. (Credit Sesame is a resource you can use to check your credit score for free.)
The soft-check process only takes about 60 seconds. If you’re approved, you’ll see the amount of your credit line, your interest rate, and the due date for your first Tally payment (which is about one month after you create the account).
Once you’re approved, you’ll need to link your credit card accounts to Tally using the usernames and passwords for those accounts.
Tally will also ask you to either scan your credit cards or enter their details (number, expiration date, etc.) manually. Getting fully set up only takes a couple of minutes, and is basically step-by-step identical to adding a credit/debit card or bank account to PayPal or Venmo.
How to Make Your Payments, and How Much Tally Costs
There are a few different things you need to understand about making payments with Tally. The process isn’t described very clearly on the company’s website, so I’m going to break it down to ensure you understand exactly what you’ll have to pay each month — and exactly how much you stand to save.
First, I think you need to recognize that there are two fundamentally different parts of this service:
Tally is a credit card account management tool.
At its most basic level, Tally is a tool designed to simplify your financial life by automatically paying your minimum credit card bills.
Let’s say you have the following credit cards:
- Chase Freedom card issued by Chase Bank
- Walmart card issued by Synchrony Bank
- Delta SkyMiles card issued by American Express National Bank
- Victoria’s Secret card issued by Comenity Bank
Tally will pay each of those four monthly bills on your behalf. Instead of logging in to four different websites and making four separate payments, you’ll simply pay Tally one lump-sum every month.
Aside from convenience, this can help you avoid late fees (as you’ll never forget to make a payment).
Tally is also a debt consolidation lender.
When you sign up and are approved for an account, you’re given a line of credit. That line of credit is used to pay down your high-interest credit card debt. Tally leverages artificial intelligence (i.e., algorithms) to determine which cards to pay off first, in order to save you the most money possible.
How is “high-interest” defined? In this case, it just comes down to which is lower: your Tally interest rate or your credit card interest rate.
Let’s extend our example from above with some hypothetical balances and interest rates. The minimum payment calculations below are based on the actual terms and conditions for each of the cards listed.
First of all, this table should illustrate why only paying the minimum due each month is a terrible idea. Because more than half of your payment goes to interest, you’re hardly making any progress on paying down the principal. That means you’ll just keep paying interest over and over and over. The total amount you’ll pay to borrow $19,500 is a whopping $49,193.05!
But back to Tally…
Let’s say you’re approved for a $7,000 Tally line of credit at 19.99% APR.
Tally would apply that $7,000 to your Delta SkyMiles and Victoria’s Secret accounts, because they have higher interest rates than 19.99%. It would not apply the credit line to your Walmart and Chase Rewards accounts, because they have lower interest rates than 19.99% — that would cost you money!
BUT, that means you’re still responsible for making the minimum monthly payments on those accounts, which is $121.05 (remember, Tally will make those payments for your convenience, and you’ll pay Tally).
So, let’s assume that Tally’s algorithm determines it’s best to pay off your highest-interest debt first — the exorbitant 27.99% you’re getting charged on your $1,000 Victoria’s Secret balance. Tally sends them $1,000, and BOOM! That debt is paid off.
- Now you owe Tally $1,000 instead, and you have $6,000 remaining on your Tally credit line.
- That $6,000 gets applied to your Delta SkyMiles card, which has a balance of $10,000.
- At this point, you’ve used up all of your Tally credit line and you still have a $4,000 balance on your Delta card.
So, here’s what you end up with in this hypothetical scenario:
The outcomes of using Tally will vary widely based on a number of criteria, but here’s a summary of how the person in this example would fare by using (or not using) Tally:
There are a few considerations you need to keep in mind when looking at this example:
As you pay down your Tally balance, Tally will apply your newly-available funds to any remaining high-interest debt. In this example, you still have $4,000 of debt with a higher interest rate than your Tally loan. As long as that’s the case, Tally will apply whatever credit you have available to that balance, which will compound your savings over time.
You can pay Tally more than your minimum monthly payment, which will result in more savings over time.
The 19.99% rate used for this example is on the higher end of the spectrum. If you have good credit, you may qualify for a much lower rate from Tally, which will dramatically increase your overall savings.
Your overall savings will depend upon how much debt you have, and how much credit you’re offered by Tally.
What is Tally Advisor?
Tally Advisor is an optional feature offered by the company that can help you get out of debt even faster. It leverages artificial intelligence and machine learning to show you the best ways to pay down your balances, based on your income and spending habits. Here’s how it works, in a nutshell:
- Tally Advisor asks you to set a timeline for repaying your debt.
- Every month, the software analyzes your income, spending habits, debt and timeline, and then suggests the best possible payment distribution.
- For example, Tally Advisor might suggest you pay an extra $50 on one particular card.
- Essentially, it’s an advanced calculator that automatically determines what you need to do to achieve your self-defined goals.
This can be a helpful tool if you have the means to make more than the minimum monthly payments, as it removes the need for you to calculate the best possible allocation of your resources.
What is Tally Save?
Tally Save is a separate app from the main Tally app. Like Digit, it’s an automated saving tool. Users link their checking accounts to the app, and then set up automatic recurring transfers into an FDIC-insured savings account.
Unlike Digit, which uses artificial intelligence to determine how much you can afford to set aside, Tally Save requires you to decide how much you want each transfer to be (and when).
What’s particularly unique about Tally Save is that rather than paying you a small amount of interest on your savings, like most traditional banks do, it pays you in rewards points that are redeemable for gift cards to major retailers.
Points are earned by hitting certain savings targets and milestones.
Related reading: My in-depth review of Digit, an AI-based automated saving tool
Is Tally Safe?
Tally uses bank-level security measures, including 256-bit encryption and SSL for secure data transmission. Personal information is anonymous, encrypted, and stored securely.
Where is Tally Available?
Tally is currently available in:
- New Mexico
- New Jersey
- New York
- South Carolina
- South Dakota
- Washington (state)
- Washington DC
If your state isn’t listed, keep checking back with Tally as they’re regularly adding new states.
Tally Review Summary: Final Thoughts
I like the concept of refinancing your debt to a lower interest rate, then eliminating your debt with the debt avalanche method.
Paying down your debts as fast as possible will save you money over time. And if you’re committed to that process, Tally can definitely help you become debt-free faster.
What I don’t like, however, is that I can easily see how someone looks at their refinanced debt and its lower interest rate and decides that the personal debt they carry is OK to let sit around; in other words, it may reduce the urgency to pay the debt off.
More importantly, the underlying behaviors that caused the debt haven’t changed. That’s a problem, because Tally essentially invites more debt. As Tally pays down your high-interest balances, you have more available credit. If you utilize that, you’re just in a bigger hole than when you started.
Finally, you need to understand that Tally is essentially offering a balance transfer; its 1% + interest minimum payment is the same as most consumer credit cards. That means that while you may be able to save money this way, you’re still going to end up paying a ton of interest if you’re only making the minimum monthly payment. If you have access to a personal loan with fixed terms (find out by using a loan search engine like Credible) that you can afford, that might be a more cost-effective option.
If you decide to sign up for Tally, think of it as the first step of many towards living a debt-free life.