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Tally raises $15M for app to make credit cards less expensive, easier to manage

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Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#21

Post by toronja »

x0x0 wrote: post #8
ashurbanipal wrote: post #5

Tally appears to do no underwriting it simply offers you a lower rate than your current cards offer and allows you to pay all the bills at once? Or does Tally have a proprietary method to tell which borrowers are worthy of a lower rate, the story is not really clear on this point.

Tally underwrites. 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. This looks like it could be helpful, but those rates are no better than your local CU offers. A…

Hey, this is Jason (Tally co-founder). Thanks for all the comments. Yes, you are correct, Tally underwrites. Here are some crazy stats.

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!

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#22

Post by toronja »

ashurbanipal wrote: post #9
x0x0 wrote: post #8

Earlier quoted context omitted.

Tally underwrites. 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. This looks like it could be helpful, but those rates are no better than your local CU offers. A…

If a credit card company can make money from me by charging the merchants I use the card with, and the credit card company gets its money for free through bank deposits and the credit card company has decades and hundreds of millions already invested in its underwriting model, how can Tally sustainably charge me less than the credit card company?

Hey, great question. This is Jason (Tally co-founder). Credit card APRs are massively inflated. Here are two points to consider:

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.

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#23

Post by screature2 »

jasper_platz wrote: post #20
brongondwana wrote: post #3

Maybe I'm missing something here, but this looks like a business with massive downside risk and very little upside. 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 mana…

we are planning to be pretty good about managing our risk :) but more importantly credit card debt isn't "bad debt" at all. most folks think that. there is about $700B of credit card debt of which about half is held by large pensions funds etc. and none of that paper defaulted in the financial crises.

My understanding is that Credit Card ABS are kept at very good ratings via careful division and securitization of the credit card receivables into different tranches of risk and corresponding priority for repayments (specifically so that pension funds and investors of that ilk can invest).

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.

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#24

Post by toronja »

brongondwana wrote: post #3

Maybe I'm missing something here, but this looks like a business with massive downside risk and very little upside. 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 mana…

Jason (Tally co-founder) here again. Its a common misconception that people who carry a balance are irresponsible. 78% of people who do carry a balance have good credit (Prime & Super Prime). We surveyed 581 of our friends on FB who all have good credit. Most of them have college or graduate degrees and work in tech. 45% carry a balance and 29% paid a late fee in the last year.

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.

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#25

Post by cloudjacker »

ashurbanipal wrote: post #9
x0x0 wrote: post #8

Earlier quoted context omitted.

Tally underwrites. 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. This looks like it could be helpful, but those rates are no better than your local CU offers. A…

If a credit card company can make money from me by charging the merchants I use the card with, and the credit card company gets its money for free through bank deposits and the credit card company has decades and hundreds of millions already invested in its underwriting model, how can Tally sustainably charge me less than the credit card company?

> and the credit card company has decades and hundreds of millions already invested in its underwriting model

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.

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#26

Post by cloudjacker »

brongondwana wrote: post #3

Maybe I'm missing something here, but this looks like a business with massive downside risk and very little upside. 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 mana…

The financial crisis happened because banks were too highly leverages on collateralized debt, not because the debt was collateralized.

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.

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#27

Post by physcab »

So I was probably in your target market last year but I'm struggling to understand how this product works. I work in tech but was laid off mid year and simultaneously incurred a bunch of debt. So I carried a balance of around $15k for most of the year (13% APR) until I could build savings up and get back on track. Thankfully I'm debt free now, but if I had had Tally, would it have paid off the balance and then I would have paid Tally a lower rate?

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#28

Post by saganus »

jasper_platz wrote: post #18
xapata wrote: post #16

Earlier quoted context omitted.

It's remarkably difficult to find your company page with a search engine. I tried "tally financial" and "tally credit card" as my search terms.

yea it's a busy term. we just came out of stealth so it will take us a little to climb up the search rankings. (part of the tradeoffs you are making when picking a company name.) https://www.meettally.com/

Was there any particular reason this name stood out for you guys even if you knew it was a busy term?

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?

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#29

Post by saganus »

toronja wrote: post #22
ashurbanipal wrote: post #9

Earlier quoted context omitted.

If a credit card company can make money from me by charging the merchants I use the card with, and the credit card company gets its money for free through bank deposits and the credit card company has decades and hundreds of millions already invested in its underwriting model, how can Tally sustainably charge me less than the credit card company?

Hey, great question. This is Jason (Tally co-founder). Credit card APRs are massively inflated. Here are two points to consider: 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 h…

Do you guys fear that if big banks start to feel threatened, they will start lobbying to keep the field uneven to their favor?

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!

Re: Tally raises $15M for app to make credit cards less expensive, easier to manage

#30

Post by toronja »

physcab wrote: post #27

So I was probably in your target market last year but I'm struggling to understand how this product works. I work in tech but was laid off mid year and simultaneously incurred a bunch of debt. So I carried a balance of around $15k for most of the year (13% APR) until I could build savings up and get back on track. Thankfully I'm debt free now, but if I had had Tally, would it have paid off the balance and then I woul…

Jason here again. Tally is like a self driving car for your credit cards. Here's how it might have played out for you if you had had Tally before, during, and after carrying a balance.

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.

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