For the past four or five years, “fintech” (that is, consumer-facing financial technology) has reached something of a fever pitch. While our parents had to balance checkbooks by hand (or via a personal computer), we have literally hundreds of apps that can do our dirty work for us. Thankfully, new technologies make it easy to manage the day-to-day tasks of our money, and to automate good behaviors.Unfortunately, the abundance of great technology means that some apps that would have had us applauding a few years ago, strikes us as “meh” today. CentsApp.io (the Cents app) is one such technology.The Cents app is a “round-up” app that rounds up all purchases to the nearest dollar. It does this by transferring money from your checking account to a “round-up” account, and then applying the savings to your debt. Essentially, CentsApp.io does what Acorns, Qapital, Chime Bank, and Bank of America (Keep the Change) are already doing, but CentsApp.io is applying the round-ups to debt.Will the Cents app offer any value to you? Here are our thoughts based on a preview of CentsApp.io.
The basic premise behind the Cents app is that Cents will automatically “round up” transactions on all your credit and debit card purchases to the nearest dollar. It will do that by reviewing your transactions once per week, and transferring money from your checking account to a “round-up” account. This account doesn’t earn any interest, but the money in the account will automatically be applied to a debt of your choice.For example, if you want to pay off a credit card, you can apply the savings to a credit card. You can also apply the debt to student loans, a mortgage, or any other type of debt.Essentially, through small amounts of change, you can make some big differences in your loans. The cost of the Cents app is $2 per month.
“Round-ups” and other forms of saving are not new concepts. In fact, these concepts aren’t even unique to the world of fintech. Banks such as Chime Bank and Bank of America (Keep the Change) are already allowing customers to engage in micro-savings without adding any additional costs. Acorns does something similar to the Cents app, but you have to invest the money rather than save it. Qapital simply holds the round-ups (and other money applied through savings rules) in a bank account, and you can use the funds as you see fit.Technically, the Cents app is the first app that allows you to use round-ups to pay down debt. Obviously, you could use the funds from Qapital or one of the bank accounts to do the same thing, but it’s one extra step (unless you setup Qapital’s fancy IFTTT features).I see a modest value in the Cents app, especially if you’re excited about getting out of debt. People who want to spend more time focusing on income, business growth, and investments can probably skip the app.
A quick review of my transactions for the previous month showed that the Cents app would have directed $42 to debt, and charged another $2 for its services. Paying $2 to direct $42 to my debt sounds pretty expensive in my opinion. That said, someone struggling to pay down debt might find the extra $2 well worth the cost.If you already have a lot of your financial life automated, but you want to do a bit better, the Cents app could push you over the edge.
The Cents app has an interesting premise, but you can achieve a similar result by automatically putting an extra 10 to $20 towards your debt each week. Personally, I think that you’ll get much further ahead by prioritizing savings and debt pay-down rather than scraping up the leftover pennies after spending.If you’re already taking steps to get your debt paid off, and you want one last motivational push, the Cents app makes sense. Otherwise, skip it and focus on more powerful actions like saving, investing, and making huge payments on your debt.