This is one of the top concerns for me with this scheme. Especially because all other avenues for compromising security still remains (individual credit card accounts, plus the credit reporting bureaus) and this adds a consolidated account that has full details of all the credit accounts, offering one more avenue for compromise.
Something else that bothers me is the debt dynamics. While Tally keeps making the payments, the debt is not really going away. It’s just repackaged into a consolidated debt, on a continual basis. Considering that this app is designed to be a tool to accelerate the payoff of debt, there is nothing that seems to stop the consumer from taking on more debt than absolutely necessary. An insidious side-effect can be that the credit cards may end up increasing the consumer’s credit limit based on on-time payments! It just means that there can actually be an increase in debt payments. Perhaps I am missing something here.
I think this works well in situations where normally fiscally careful people racked up significant credit card debt that could not be simply paid off, but are disciplined enough to do the right thing towards debt-freedom. The slippery slope is where the original debt was due to the consumer’s lack of control in taking on that debt.
I personally like to pay off my credit card charges each month, so that I don’t need to worry about finance charges. For consumers that believe in that model and are able to keep the finance charges at bay, Tally has no benefit. On the flip side, as I mentioned briefly, Tally may end up helping people get out of control even more.
There is a small cross-section of consumers that will benefit from this service, in my opinion. For the majority, I don’t see a benefit.
But this is a fascinating application of wholesale vs. retail debt.