Tally is a mobile app with a fresh approach to tackling credit card debt

• Tally is a financial app that helps you organize and pay off your credit cards in the most optimal way.
• While Tally doesn't charge any fees, they make money by consolidating some of your debts onto a new line of credit with a lower APR.
• If you're struggling with credit card debt, make sure to consider Tally as well as other debt repayment products like credit cards with introductory APR offers and personal loans.
• Pay off debt faster with Tally »

When it comes to paying off high-interest credit card debt, there are plenty of options and strategies to consider. Some say you should stop using credit cards and take out a low-interest personal loan that lets you consolidate all your debts, while others swear by 0% APR credit cards that let you save money on purchases or balance transfers for a limited time. Some people also choose to consolidate debt using financial products like a home equity loan or home equity line of credit (HELOC), both of which tend to offer low APRs since your debt is secured by the value of your home.

Then there's Tally, a newer financial app that aims to help consumers pay down their high-interest credit card debt in a brand-new way. When you download the app and take the steps to apply, Tally takes the time to analyze your credit cards and various debts with the goal of helping you minimize costs and maximize your payments each month.

Tally can also extend you a line of credit at a lower interest rate than you're being charged elsewhere, and the app lets you make a single payment each month, which Tally distributes to your creditors in whatever way reduces your interest costs.

If you want to get out of debt and feel like you need outside help, Tally may be worth exploring. Keep reading to learn more about how this app works and how it compares to other debt consolidation options.

How does Tally work?

Once you sign up for an account and link your credit cards, Tally monitors your balances, credit card interest rates, and due dates on your behalf. In the interim, Tally also extends you a line of credit that is meant to help you consolidate part of your debt at a lower interest rate.

Tally then takes over your credit cards and bills if you opt for the "Tally Pays" option, making sure you never miss a payment. It also calculates the smartest way to help you save money on interest across all your credit cards and your Tally line of credit. If you want to continue paying your credit card bills yourself, Tally also allows that option, although they will still send you reminders that tell you when your payment is due and how much you should pay toward each of your cards.

Tally is a free mobile app, meaning you won't pay any fees to get started. With that being said, you'll need to apply for Tally and a Tally line of credit in order to start using the benefits.

Tally lines of credit come with an APR between 7.9% and 25.9% APR, although this rate is variable and based on the prime rate just like credit card interest rates. Also note that Tally comes with no annual fee, no origination fees, no balance transfer fees, no late fees, and no prepayment fees. The app also boasts an average lifetime savings of $5,300 for its customers so far.

You're probably wondering how Tally makes money. Generally speaking, it makes money from interest charges on the line of credit it extends you in order to consolidate some of your debts. On the user end, you'll save money when Tally is able to offer you a lower interest rate than what you're getting from your credit cards. Tally also uses an algorithm to make sure every dollar of your monthly payment is smartly allocated to maximize interest savings.

Pros and cons of using Tally

If you're ready to get out of debt and you want to save money on interest along the way, you may be considering an alternative option like Tally. After all, Tally is not just "another loan" that can help you rack up more debt over time. Instead, Tally extends a line of credit that's meant to consolidate some of your highest-interest debts. And, at the end of the day, Tally only makes money when it's able to save you money with a lower interest rate.

Still, there are definitely some pros and consider. Consider these advantages and disadvantages before you download the Tally app and move forward with a debt repayment plan.

Advantages of using Tally:

• You can still take advantage of important credit card benefits. Tally doesn't require you to cancel your credit cards and you may continue carrying balances on some of them anyway until they're paid off. Regardless, you'll still be able to keep using any important benefits your credit cards offer, including perks like travel insurance and extended warranties.
• You can pay just one bill each month. If you choose the "Tally Pays" option in your app, Tally will charge you a single payment each month, which it distributes to your credit cards in an efficient and money-saving way. Consolidating all your payments down to one each month can make debt repayment significantly easier.
• Tally is free to use, and you can even save money. Tally doesn't charge any fees for using the app, although it does earn interest on your Tally line of credit. With that being said, the Tally line of credit aims to come with a lower interest rate than you were being charged before.
• Tally takes the stress out of figuring out which bill to pay first. Tally does the grunt work for you in terms of figuring out which credit card bills you should focus your energy on. In fact, it uses an algorithm that determines your credit card payments based on maximum interest savings.

Disadvantages of using Tally:

• Tally isn't available in every state. Tally is currently available in 30 states and Washington, D.C. Residents in other states can't use the app yet, but they can get on a waiting list.
• Tally doesn't limit temptation to rack up more debt. Tally does help you figure out the optimal way to pay off credit card bills, but the app doesn't prevent you from using your cards to rack up more debt. Of course, you do have the power to stop using credit cards once you start using Tally.

How does Tally compare to a personal loan or a balance transfer card?

In a lot of ways, Tally works similarly to both personal loans and balance transfer cards. The Tally line of credit aims to offer a lower interest rate like balance transfer cards do, yet the line of credit component also lets you consolidate some of your debt like you would with a personal loan.

With that being said, it's possible a debt consolidation loan or 0% APR balance transfer credit card might work better for your needs. This chart explains more about how each option works and who should consider each option.

The bottom line

Tally lets you organize your credit cards and debts, but this app can also help you pay down your balances in a strategic way. If you choose, Tally will even let you make a single payment, which it will allocate to all your bills on your behalf.

Tally is free to use and it only makes money by offering you a lower interest rate than you're paying now on at least part of your debt. With that being said, it's possible a personal loan or a balance transfer card might work better for you based on your situation. Make sure to consider Tally, but also compare other options before you decide.

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Read the original article on Business Insider