New tool offers credit card perks without debit card dangers

New tool offers credit card perks without debit card dangers
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All year long,‘s Michael Timmermann is sharing quick and easy ways to save money as part of our Michael Saves series. Check in every Monday as he puts new and familiar savings strategies to the test. Sign up for our newsletter to have these stories delivered to your inbox!

If you’re a fan of money expert Clark Howard, you know the man doesn’t like debit cards and even refers to them as “piece of trash fake Visa and fake MasterCards!”

In fact, the only time Clark uses a debit card is to withdraw cash from an ATM.

Although debit cards don’t have the same protections as credit cards if your account is compromised — which is Clark’s primary concern — many people use debit cards to avoid overspending.

Now, there’s a new online tool called Debitize that makes your credit card act more like a debit card.

Read more: 9 places you should never use a debit card

Debitize: How to use your credit card like a debit card

How is that possible? With every credit card purchase, Debitize takes money out of your checking account, holds it in a reserve account and then pays your credit card bill before it’s due — no interest and no late fees.

I signed up for a free Debitize account to see how it works. To get started, I linked my checking account and one credit card to the tool, plus provided some personal information to verify my identity.

Debitize says it offers bank level security and doesn’t store account login information on its servers.

After swiping my credit card, I received an email to let me know how much money was being transferred to the reserve account, as well as my current checking account balance.

A few days later, I received another email that said my credit card payment was scheduled. Here’s a sample of how the alerts look:

Debitize screen

One of the features I like about Debitize is that it allows you to set a minimum balance for your checking account so that you don’t have to worry about being charged overdraft fees.

For someone who uses a debit card regularly, I see a few benefits to using a credit card with Debitize:

  • Better fraud and dispute protections with credit
  • On-time credit card payments help build credit score
  • Many credit cards offer cash back rewards or travel points
  • Credit card bills are paid in full to avoid interest charges
  • Maintains discipline of paying with debit or cash

Read more: The one and only reason to have a ”˜piece of trash’ debit card

Listen: Clark talks about debit vs. credit on The Clark Howard Show Podcast

Although Debitize is free, it offers a $3 a month Credit Optimizer feature that pays down your credit card balance once a week to keep your credit utilization ratio low.

Keeping your credit utilization ratio below 10% is one of the ways to quickly boost your credit score. Read more here.

“If it’s all about disciplining yourself, this gives you the opportunity to have that discipline and have the protections and rights that come with a credit card as well,” Clark said while talking about Debitize and a similar product Debx.

Debitize has launched as web-based only, but it’s rolling out apps soon. Debx currently has a wait list.

Check out more from our Michael Saves series:

Why debit cards are inferior to credit cards

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