
Tally raises $15M for app to make credit cards less expensive, easier to manage - david_lieb
http://techcrunch.com/2016/05/19/tally-raises-15-million-for-app-to-make-credit-cards-less-expensive-easier-to-manage/
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thejvexperience
I built the core financial engineering stack at Tally and absolutely love our
product! The stuff I worked on was cool (lots of highly non convex
optimizations, cool statistical methods, all Scala stack, very FP-oriented,
etc.) but mainly the experience we deliver to consumers is incredibly
powerful. The biggest challenge was probably getting this very complex, very
real-time concept to work on an antiquated financial system. We're proud to
say we have. Sign up now! You won't regret it!

Also, PM if interested in anything on the "Careers" page. What do you all
think?

Cheers!

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xapata
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.

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jasper_platz
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/](https://www.meettally.com/)

~~~
saganus
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?

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ashurbanipal
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.

~~~
x0x0
Tally underwrites.

from [https://www.meettally.com/how](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.

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.

~~~
ashurbanipal
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?

~~~
toronja
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.

~~~
saganus
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!

~~~
jasper_platz
Big banks are powerful and we don't take that risk lightly. However,
regulators like the relatively new CFPB, are generally on the side of
consumers. So as long as we always do right by consumers and don't lend
irresponsibly, we have a very good chance of being on the right side of
history. That said, we'll take any and all luck you can send our way

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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?

~~~
toronja
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.

~~~
physcab
Ah ok. Makes sense. I remember searching for a low interest loan because I
knew I would be able to pay it back and thought 13% was ridiculous for such a
credit worthy individual (credit score 760). Thanks for taking the time to
answer, it is definitely a cool product!

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brongondwana
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 managing the risk that people
just run up huge debts on multiple cards and leave Tally holding the baby?

~~~
Animats
Yes, not seeing the business model here. They're basically issuing a credit
card of their own.

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.

~~~
toronja
Good question on introductory rates and fees. Tally does NOT offer
introductory or "teaser" rates. Your Tally APR is your Tally APR.

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.

~~~
Animats
The site does not seem to have terms and conditions, so we don't know if Tally
reserves the right to change that at any time, with or without notice.

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pjc50
I suspect there would be much less market for the autopay feature here in the
UK, where you can ask the bank to direct-debit the minimum amount every month
to make sure you have no late fees.

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.

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DarthMader
1\. How does Tally calculate how to much to pay for a bill? For example,
sometimes I have will receive a statement weeks prior to the bill date where I
only have to pay a small amount, but I'm actually carrying a larger by the
time that the payment due date comes around.

2\. Do you do a hard pull of credit?

~~~
toronja
You raise a really good question. Credit cards are confusing by design. Many
people don't have the time to optimize how they pay their cards.

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).

~~~
DarthMader
Ironically, by doing a hard pull, you're hurting my credit slightly, which is
against your stated mission.

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.

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kevin_b_er
Debt consolidator, but on a phone. All usual criticisms of debt consolidation,
but with the irrational exuberance of a SV startup to add on.

~~~
toronja
Tally is more like a self driving car for your credit cards. It helps
optimizes all your payments, balances, stops late fees, and helps you avoid
obscure penalties.

Even if you never carry a balance, Tally is the easiest ways to manage your
credit cards.

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ffumarola
So, revolving debt consolidation? Interesting.

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ieatbigcookies

       “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.
    

Institutional investors were pulling back from buying marketplace lender debt
even before the Lending Club nonsense. IMO only dumb money is going to be
interested in loaning money at less than credit card rates to consumers who
will use the funds to pay off their credit card debt. Maybe a year ago....

