How Tally Stacks Up Against SoFi Debt Consolidation
What’s the difference between the Tally app and SoFi debt consolidation? Here’s what you should know about using these services to reduce credit card debt.
September 9, 2022
For borrowers with significant debt from multiple credit cards, finding a way to combine their bills into a single lower-interest payment can make it easier to get their finances back on track.
After all, credit card debt can add up quickly. High interest rates can cause your debt to increase exponentially if you don’t pay off your card balance in full for each statement. Making the minimum monthly payment will improve your payment history, but it can still hurt your credit score as your debt load increases.
Of course, if you have multiple credit cards, keeping track of all those bills can become a tall order in and of itself. It can be all too easy to forget to pay a bill or to get overwhelmed by the sheer number of bills coming in.
To alleviate this, some people take out a line of credit or a personal loan to combine their credit card debts into a single monthly payment with a lower interest rate. While SoFi debt consolidation is a popular choice to address credit card debt, it isn’t the only option. Here’s a closer look at how Tally† compares.
How debt consolidation differs from a balance transfer
Debt consolidation is when a lender rolls multiple loans or high-interest debts into a single monthly payment. This can be done with credit card debts, student loans, and other types of accounts, depending on the lender.
Consolidation can help borrowers by reducing the number of bills they have to pay each month. Quite often, this allows them to qualify for a lower interest rate, which can help reduce total expenses over the life of the loan. This is similar to how refinancing works on a mortgage. With a lower interest rate, you may even have a lower total monthly payment, depending on the term of the loan.
Debt consolidation loans are often used as an alternative to a balance transfer credit card, in which you transfer debt from one card to another. While balance transfer credit cards can also reduce how many bills you have to pay, they are often subject to transfer fees and deferred interest payments.
An excellent credit score is sometimes required to qualify for a balance transfer credit card, which means it may not be an option for some.
How SoFi debt consolidation works
SoFi debt consolidation is done through the SoFi personal loan program. SoFi will provide a lump sum to the borrower, which they can then use to pay off their credit card debts.
In many ways, this operates similar to any other personal loan offered by SoFi, except that the terms of the loan agreement require the borrower to use at least 50% of the loan proceeds to pay off their credit cards. They can’t be used for home improvements or other needs. These unsecured personal loans do not require collateral.
As with other SoFi personal loans, SoFi debt consolidation loans do not charge origination fees, annual fees or late fees. They come with a fixed annual percentage rate (APR) that ranges from 7.99% to 23.43%, when all potential discounts are applied. Loans come with a term of three to seven years, with loan amounts ranging from $5,000 to $100,000.
Prequalification is done online to determine eligibility, loan amount and interest rate. While SoFi does a soft credit pull during prequalification, it does a hard credit pull once you submit your official loan application, which will show up on your credit report and potentially lower your credit score. SoFi will also evaluate your expenses-to-income ratio to determine if you can afford your loan payments.
Because of this, qualifying for a SoFi loan that allows you to pay off your cards may be difficult for individuals with a lower credit score. While the company lets you use a co-borrower, that person would need to have a solid financial history and be willing to help you shoulder the loan debt.
SoFi does not charge prepayment penalties, but your extra payments will initially go to the interest, not your principal, as is typical for installment loans. Still, this can lower your lifetime costs on the loan. There is also a slight discount for customers who use autopay.
While SoFi’s low fees can help you save, you are still ultimately responsible for paying off your existing credit card debt yourself. The new loan is a new responsibility you will have to keep track of in addition to your monthly credit card statements. This could make it all too easy to forget about a bill and fall behind with late payments again in the future.
How Tally is different
With SoFi, you essentially take out a personal loan, the majority of which must be used to pay credit card debt. With Tally, you are instead taking out a line of credit. After you qualify for and open a Tally line of credit, we pay off your high-interest credit cards right away. The total debt amount is applied to your line of credit, which you pay back to Tally in a single monthly bill.
Because Tally offers a line of credit, you can continue to use your credit cards as normal but only make a payment to Tally. As you use your credit cards, you’ll add to the balance on your line of credit. But as you make payments, you’ll free up more available credit. Tally will continue to handle your credit card bills, so you don’t have to worry about making the payments on those accounts.
Tally offers low interest rates that range from 7.90% to 29.99%. The application process is quick and easy. Simply sign up on the Tally app, add your credit cards in the encrypted platform, and Tally will evaluate your creditworthiness to see if you qualify for a line of credit.
There is no minimum credit score needed to qualify, though most Tally line of credit holders have at least a 580 FICO® Score. Of course, good credit will help you qualify for the lowest rates and a higher credit limit. It is also worth noting that Tally runs a soft credit pull that won’t show up on your credit report.
For Tally+ members, there are extra perks that come with timely repayment. In addition to steeper discounts and higher credit limits, Tally+ lowers your APR by an average of 4% if you make your minimum monthly payment for 12 consecutive months. The $300 annual membership fee for Tally+ is rolled into your line of credit so you never pay out of pocket.
With a Tally line of credit, you’ll only have to worry about one monthly payment, even as you continue to use your credit cards. With a lower interest rate, you will likely pay off your debts faster so you can save on interest charges.
Get the help you need to pay off credit card debt
SoFi debt consolidation and Tally offer similar services, allowing you to get more favorable repayment terms to help you pay off credit card debts. With a debt consolidation loan or a line of credit, you can pay off your debt faster, potentially saving thousands of dollars over the life of the loan.
That being said, consider Tally to be your partner of choice as you work to get out of debt. With the potential to qualify for additional discounts simply by making the minimum monthly payment, you may be able to save even more on your repayment plan.
In addition, because Tally is not a traditional debt consolidation company, you don’t have to worry about issues like a hard credit pull hurting your credit score. And with just one monthly payment to worry about, it’ll be that much easier to keep track of your finances.
Try the Tally app yourself to learn more about applying for a line of credit and to get debt relief tips and tools.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.