If there’s a symbol for how millions of Americans are crushed by debts, it might be “Paid Off,” a game show where the prize is helping winners wipe out their student loans.
It might also be how employers are starting to help employees pay off their debts as part of their benefit packages.
Or, it might be an emerging trend of digital tools popping up in recent years to help you pay off all sorts of debts — from credit cards to mortgages to student loans.
Rather than pitching you on refinancing your loans, these digital services are focused on keeping you disciplined about making more payments than the monthly minimums. True, you could make extra payments on your debts, too. But, life’s realities are much messier than things we ought to do. Plus, many of us prefer to spend our time on anything but budgeting.
So, for those wanting a helping hand to chip away at outstanding debts, consider these five digital services that plug into your bank accounts to do the chore for you.
ChangEd is on a quest to help young adults get rid of one of their biggest burdens bit by bit: their student loans.
The startup’s method? The app rounds up your change when you buy something on a connected debit or credit card and uses the money to make another payment on your student loan.
So, if a ChangEd user buys a pumpkin spice latte for $5.25, the app will move 75 cents aside. Once the app has collected $100 in spare change, ChangEd will use it to make a payment on your student loan. And so on and so on.
On the app, you can view the progress you’re making — including by seeing how many years you’re shaving off by making extra payments on your student loan.
“That constant encouragement is super important,” says Dan Stelmach, a co-founder at ChangEd. “It encourages you to continue.”
It’s all part of trying to keep you motivated on something that takes years to accomplish.
Cost: $1 a month. For members of Tropical Financial Credit Union, the service is free. Family members can also use the app to make contributions.
2. Fifth Third Bank’s Momentum
Fifth Third Bank was asking typical icebreaker questions during one of its focus groups related to how people view money. Then one came up about significant others and a participant started to visibly break down. The trigger? His student debt.
He felt he wasn’t making any real progress on paying off his loan to the point where he worried whether anyone could trust him in a relationship, says Mike Crawford, a senior product manager at Fifth Third Bank.
The focus group participant is one of many who have had their student loans induce strong emotions.
“We knew we had to do something,” Crawford says.
Enter Momentum, a stand-alone app from the bank that rounds up your change to put toward your student debt. You can also decide to make a bigger payment toward the debt by telling the app to add $1 to every purchase you make. Once you’ve saved at least $5, the app will make a payment on your loan on a weekly basis.
Like ChangEd, Momentum is designed to help you see how small changes can help you accomplish a big goal in a tangible way. Case in point: Fifth Third estimates that consumers could pay off a 20-year loan three years sooner if they made an additional $25 payment on it every month. In so doing, the bank also estimates that they would pay 8 percent less in total.
Since Momentum is from a bank, users don’t have to share outside bank data with the app. However, you do need debit cards with Fifth Third to use it.
Cost: Free. Family members can also participate.
Like ChangEd, the Qoins app plugs into your bank accounts, so it can round up the change to the nearest dollar when you buy something and apply the pocket change to a debt you owe. Unlike ChangEd or Momentum, you get to decide what kind of debt to apply the extra payment, too. So far, the app says credit card and student debt are its main focus.
Cost: $1.99 per payment.
4. Digit Pay
Digit, the creator of one of the first services to help you automatically save money, is moving on to its next act: paying off credit card bills.
Once you set up a credit card goal on Digit, the app will periodically move money from your linked checking account into that goal. Then, Digit Pay will use that money to make an extra payment on your credit card balance every month.
Right now, the feature is not widely available. But, the company says everyone will have access to Digit Pay by early 2019.
The vast majority of the app’s users could find value in such a feature. Of Digit’s users, 75 percent of them have credit card debt.
Unlike the other apps, Digit isn’t rounding up your change. Rather, it’s analyzing your checking account data to determine what it thinks you can afford to put away.
Cost: The general Digit app charges users $2.99 per month. You can also try the app for free for 100 days.
EarnUp is on a mission to help the 200 million indebted Americans stay on track to get out of debt — whether it’s related to student loans, credit card bills, mortgages or all of the above — under one hub.
“For us, debt is ground zero of a consumers’ financial wellness,” says Matthew Cooper, co-founder and chief executive of EarnUp.
EarnUp works like so: After you sign up and sync your loan accounts, EarnUp will take a portion of your payday, each payday, before you spend it. Then, it will use that money to make a payment on your outstanding debts. It’s designed to make sure you’re prioritizing payments on your IOUs without having to deal with the burden of budgeting. It also lets you manage all of your loan payments from one platform.
You also have the option to connect your checking account data to EarnUp. In exchange, you can receive alerts like the platform warning you that you are in danger of not having enough money to make a payment. While an alert can’t solve all liquidity problems, the heads-up could give you a runway to avoid the scenario before it happens.
Cost: Free for those who have loans with EarnUp’s partners and $9.95 per month for those who don’t.