Tally raises $15M for app to make credit cards less expensive, easier to manage
techcrunch.com
techcrunch.com
Also, PM if interested in anything on the "Careers" page. What do you all think?
Cheers!
I even searched directly for Tally Technologies and some other Tally Technology name pops up.
How expensive it is for a company that just came out of stealth to increase the search rankings vs changing the name to something less crowded?
It's just an interesting problem since it seems more and more companies are using the same terms (or maybe meaningful company names are drying up?, like that South Park episode), instead of creating new nonsense names.
Maybe nonsense names are not as attractive to potential customers of a financial company?
Scrolling skips on andriod. I'm not even sure of the cause.
from https://www.meettally.com/how
you will need to qualify for and get the Tally Credit Line. Depending on
your credit history, your APR (which is the same as your interest rate) will
be between 7.9% - 19.9% per year. And similar to credit card APRs, it will
vary with the market based on the Prime Rate.
As mentioned elsewhere, this seems like a hard business -- smart people use their credit cards as charge cards and pif every month. You probably aren't carrying a balance at 20% plus if you have the cash elsewhere. But good luck to them; the more competition banks have the better.
A. For every 10 people who have a credit card, there are 16 late fees assessed every year. With Tally, you don't have to worry about missing payments.
B. 4 out of 10 households carry a balance ($15K average) for a total of $700B. 78% of those balances are held by people with good credit (Prime or Super Prime), yet their average retail APR is 18%. With Tally, you don't have to worry about being charged unfair APRs.
I hope that helps!
lolol so many assumptions!
yeah they are overcharging. Credit card companies would be profitable lending at Fed Funds Rate + 2%
Instead they charge 14-22% no matter what. No matter what the macroeconomic environment is.
A. There is a 500% difference in the likelihood of someone paying back a loan with a 760 FICO score vs someone with a 660 FICO score, but only an 8% difference in APR.
B. "the credit card business continues to be the most profitable bank lending business, with returns more than four times higher than the average return on assets." - Richard Cordray, Director of the CFPB (December 2015)
The bottom line is that banks are significantly overcharging consumers AND have high fixed costs. Because of the technology Tally has built, our cost structure is an order of magnitude lower than banks. This means we can save customers money and be profitable as a business.
Leaves me wondering how much inroad is possible to make going against such big (and dirty-playing) actors.
I mean, obviously if you get to that point you must be doing something right, and shaking the big entrenched businesses can sometimes (most of the times? always?) bring good things, so good luck!
Also, there may be lots of people who foolishly don't use CUs. If Tally can reach lots of them they'll do well for themselves.
Currently Tally is limited to customers who get approved for a Tally Credit Line. The approval is based on typical criteria such as your FICO score, debt and income. As of April 2016, our minimum FICO score is 660.
1. Before you carried a balance ($0 Balance) -Tally is free to use and pays all your cards for you every month. This means that instead of keeping track of multiple payments and due dates, you make just one payment to Tally. No more late fee anxiety. Easily manage all your cards in a single app.
2. During balance building (building up to your $15K balance) -Since you lost your job, you no longer choose to pay 100% of what you spend every month. Instead, you just pay pay your Tally minimum and your Tally balance grows. -Instead of paying 13% APR to your credit cards, your balance is held with Tally at a lower APR. I obviously don't know your credit score, so I can't say what your Tally APR would be, but for me my best credit card APR is 13.24% and my Tally APR is 8.90%. So assuming you qualify for the same Tally APR as I do, you'd save $500-$600 in interest.
3. During balance paydown (paying down your $15K balance) -Since you now have a job, you start paying more than the Tally minimum. -Tally continues to pay your cards on-time for you, and you just make one payment to Tally. -Eventually you pay your Tally balance down to $0.
4. After balance paydown ($0 balance) -Tally continues to pay and optimize your credit cards. Tally is free to use, protects you from late fees, and is the easiest way to manage all your cards.
It's bundling a bunch of bad debt (nobody who manages their money well is going to pay 20% interest if they have better options) and hoping that the aggregate is less risky. I have a feeling we've seen that sort of wishful thinking about debt before.
So what am I missing that makes Tally so good at managing the risk that people just run up huge debts on multiple cards and leave Tally holding the baby?
Somehow, I suspect this will morph into a "consolidate your bills" scheme, or the low rate is only an introductory rate, or there will be big fees, or they try to sell you on a home equity loan, like LowerMyBills.com.
And Tally does NOT charge ANY fees of ANY kind. Here's a cut and paste from our FAQ: "There’s no annual fee, no origination fee, no prepayment fee, no balance transfer fee, no late fee, no overlimit fee, nada. Like you, we hate hidden fees."
Tally makes money by charging interest on the amount you borrow from us. We only make money if we can save you money. But that’s it.
Bottom line: credit cards are the most profitable bank lending business (4x more profitable), so there is a lot of room to save people money and earn a profit as a company.
Remember those "responsible mortgage holders", homeowners with culturally "good" debt? The whole economy tanked because only 7% of them defaulted.
This business model is fine if Tally's leverage isn't too high.
The fact that none of those securities defaulted during the financial crisis, doesn't mean that none of the underlying credit card receivables were written off or otherwise defaulted on.
Seems that the parent comment's premise is essentially correct, you guys are going to be handling some portion of those credit card receivables and are betting that you can cherry pick or otherwise attract the safe/good/profitable portion.
edit I realize that this comment probably comes across a fair bit more pessimistic than I intended. Actually, I think that this is a pretty decent bet. Pretty sure they're right about the existence of a class of cardholders who choose to carry a balance for convenience or short-term need rather than long-term circumstances or irresponsibility. Not sure what the TAM is on that, but definitely sounds like it's a hypothesis worth following up on.
I'm skeptical about the improved rates for debt consolidation, but if you're going to give people subsidised credit with investor's money I'm not going to complain.
2. Do you do a hard pull of credit?
The Tally algorithm absorbs all this complexity and recommends whatever is in your best interest.
1. With the fact pattern you've provided, there are situations where Tally would only pay the Statement Balance (the smaller amount you mention) so that you can take advantage of your card's grace period.
But if you are not in grace with a card (meaning you haven't paid 100% of your Statement Balances for the previous 2 consecutive statement periods), Tally will suggest paying more/all of the Statement Balance to minimize your interest charges.
Bottom line: Tally is really smart and mathematically suggests whatever is in your best interest.
2. To see if Tally makes sense for you, its a soft pull and then a hard pull to actually open a Tally account.
-Jason (Tally co-founder).
Some of the appeal of the new FinTech startups are that they don't measure customers based off traditional models of risk eval (FICO, etc.) but that they are able to factor in both past and future based on many more data points. I'll keep monitoring Tally and hope in the future you can arrive to this same point.
BTW, I hope you look into marketing to credit card churners. I think they would love your product.
Even if you never carry a balance, Tally is the easiest ways to manage your credit cards.
“Tally solves problems that customers have managing multiple credit cards, incurring charges or fees, and not knowing which one to pay first,” Flynn said. “Theirs is an elegant solution that can apply to a lot of people.”
“The investment community has gotten comfortable with non-bank entities originating loan assets,” Brown said.