How to Use a Credit Card Like a Debit Card– Keep Benefits, Lose Debt

One of the things I love, love, love about the way we manage our budget is how we handle credit cards.  Though we’ve always paid our credit cards off in full each month, I used to stress over the timing of credit card payments.  I’m going to show you how you can stop stressing over timing your credit card payments and start using your credit card like a debit card.

Once we started living on last month’s income and embraced the YNAB credit card process, we’ve never had to wonder or stress or scramble to pay a balance again.  Part of the reason is that we know exactly how much money we have to spend each month because we set aside all of our income from the month before to use in the current month.

The other reason we no longer stress over timing credit card bills is that when we spend money with a credit card, the money is deducted from our budget categories as soon as we spend it, rather than when the bill comes.  The money is essentially “gone” from our available budget the moment we swipe our cards, even though the actual cash is still sitting in our checking account waiting for the bill to come.

For the last several years, we’ve basically been treating our credit cards like debit cards, but still enjoying the credit card perks that we love.

Recently I was introduced to a new, automatic way to do this that’s even simpler than our method and still completely cuts out bill-timing stress.

If you don’t do credit cards

Credit cards can be a sensitive topic in the world of personal finance.  People love ’em or hate ’em.  The passion is strong in both camps!  And I’m not trying to change anyone’s mind.

If you don’t use credit cards and know they’re not for you, go ahed and skip this post and come back in a couple days when we’ll talk grocery budgets.

If you love the convenience, safety, rewards, organization, and other perks of credit cards, then I’m excited to show you how you can have all of those benefits while also having the perks of a debit card.

The best of both worlds

Let’s talk about the benefits of DEBIT cards.

*When the money’s gone, the money’s gone.  Your spending is (almost) immediately reflected in your account balance.  No monthly surprises when your bill comes.

*You don’t have to even think about bills.  That means you don’t have to worry about timing credit card bills with your paycheck.

Debitize, lets you essentially turn your credit card into a debt card.  You get the best of both worlds!

You get the security, rewards, convenience, and other perks of using a credit card but the money comes out immediately and, like with a debit card, you never have to worry about whether you’ll have enough on hand to pay the bill when it comes due.

How does Debitize work?

With Debitize, you use your credit card as you normally would.  Each day, they take the amount you spent on your credit card out of your checking account and hold it in your own Debitize Reserve Account.  At the end of the month, Debitize pays your bill for you!  It’s all automated.

Sounds pretty simple, right?  It is.

Can’t I just do that myself?

Of course you could do it yourself.  You could take money out of your checking account each time you spend money on your credit card and hold it in a separate account until your bill is due and then pay your bill from that account.

But that would complicate your life, not simplify it.

Automation is the beautiful part of what Debitize does.  You can spend with your credit card and rack up points, track your purchases, or whatever it is you love about using your credit card, but not have to worry about paying your bill late or not having the cash available to pay your bill.  Your checking account balance will be a true reflection of what you have available instead of having some of those dollars spoken for by your upcoming credit card bill.

But what if…

Debitize claims to have bank-level security and other safeguards in place.  After your accounts are linked, Debitize doesn’t  store the login credentials.  Your funds can only move between your checking account, your Debitize Reserve Account, and your credit card.  You can read more about the account security here.

Debitize also has safeguards to prevent it from overdrawing your account.  You set an account minimum for your checking account, and if withdrawing the amount you purchased with your credit card would cause your checking account to go below the minimum, Debitize won’t make the withdrawal.  That keeps you from getting overdraft fees (but it also means Debitize won’t be able to fully pay your credit card balance until you get everything resolved.)

For a thorough list of Frequently Asked Questions, scroll to the bottom of this page and click FAQ.

How much does this service cost?

Making your credit card act like a debit card with Debitize is actually free.  In fact, when you sign up now you’ll even get a $10 credit on your bill.  All you have to do is give Debitize a try for at least five credit card transactions.

If free seems too good to be true, know that the company does have plans to monetize its service through premium offerings.  If all you want is the free version, there’s no charge at all.

Finally, to be clear, Debitize isn’t a credit card company.  They don’t issue credit cards.  They work with a credit card that you already have.

Will Debitize help YOU?

Like any tool, credit cards can be dangerous when used carelessly, but they can be beneficial when used with care.  I love the way Debitize works to make your credit card work like a debit card so you can automate the safe use of your credit card.

Since we strictly spend according to our account balances in YNAB we essentially have this system going on already, so I haven’t used Debitize myself.  If we didn’t have this process already in place, Debitize might be a good way to easily make the switch.  It sounds like a concept that could really help streamline your life and prevent unnecessary late fees and budgeting stress, so I wanted to share it with you!

Debitize could be helpful for people who:

• Want to pay their credit card in full every month
• Want to take advantage of their credit card reward program
• Want to stop stressing about timing credit card bills with paychecks

Credit cards aren’t for everyone and neither is Debitize.  On the other hand, this type of innovative service might just make the difference in using credit cards wisely with your budget (while you rack up those cashback points or travel miles with your favorite card).

How about you?

• What systems do you have set up so that you have the money available for your credit card bills?
• What are your favorite type of credit card rewards?

Debitize did not request this post and is not sponsoring it, but this sounds like a product that could be great for many readers and I wanted to share.  The post does contains referral links which earn you a $10 credit toward your bill and may provide a similar kickback for us.