Thoughts on Extra.App?

[Velcade]

On 2/15/2022 at 7:46 PM, JonoT said:

How does it work? 

 

- build or repair credit with a debit card

- "spot" you the funds to make any purchase today but withdraw it from your bank account tomorrow
- app/service links up to your bank account and bases your spending power in buckets also your balance

- at the end of each month, they send your purchase + payment history to credit reporter (Equifax and Experian)

- the service is a monthly fee of $7 to $12 (based on the account type you want)

This seems predatory... 

[yolosnail]

I personally think that personal finance is one of those areas you just shouldn't touch, especially when it could genuinely ruin someone's life.

 

The fact that you would even consider accepting a sponsorship from a service like that is frankly worrying to me given the age of the target audience. It's one of those things that should be left to the professionals (or at least someone who knows what they're talking about).

 

What's next, LMG accepting sponsorships from payday loan companies so people can buy that some more RGB?

[LinusTech]

Really great feedback in here guys, but we should try to keep on topic. 

 

1. If you're not US-based, you probably don't have much context for the value of this service. I get it. Credit cards are a part of life here in N America in a way that they are not in other parts of the world. 

 

2. Please leave the determinations aviht our target audience to us. We do not largely cater to minors. They are like... 3% of our audience. 

 

I think some of the DD in here is amazing and will help guide our questions for these guys and our potential talking points as we decide whether to work together, but with any sponsor we try to put ourselves in the shoes of the actual customer for the product. 

 

On the surface as an 'American-adjacent' person this makes a ton of sense. There are people in my life who absolutely need something like this. They won't take on a real credit card because they are too scattered to remember to pay it on time, which means they never build credit. This is actually a really interesting solution to that. 

 

With that said I also need to know more about the funding model. A few dollars a month is totally 'enough' - many basic credit cards here are free because they collect from merchants - and if anything I think for this kind of 'poor at managing money' customer if actually prefer they had a free tier... Maybe they assume monthly spending will be too low to be sustainable that way. 

 

Definitely still more DD to do. Thanks for all your input so far!

[adarw]

44 minutes ago, LinusTech said:

2. Please leave the determinations aviht our target audience to us. We do not largely cater to minors. They are like... 3% of our audience. 

 

really?! i always thought that a large percentage of viewers are around 14 years old.

[LinusTech]

5 hours ago, adarw said:

really?! i always thought that a large percentage of viewers are around 14 years old.

Yeah it's kinda weird. It's like there's this assumption that just because people are adults they don't like fun anymore or something.

[Roswell]

6 hours ago, LinusTech said:

Really great feedback in here guys, but we should try to keep on topic. 

 

1. If you're not US-based, you probably don't have much context for the value of this service. I get it. Credit cards are a part of life here in N America in a way that they are not in other parts of the world. 

 

2. Please leave the determinations aviht our target audience to us. We do not largely cater to minors. They are like... 3% of our audience. 

 

I think some of the DD in here is amazing and will help guide our questions for these guys and our potential talking points as we decide whether to work together, but with any sponsor we try to put ourselves in the shoes of the actual customer for the product. 

 

On the surface as an 'American-adjacent' person this makes a ton of sense. There are people in my life who absolutely need something like this. They won't take on a real credit card because they are too scattered to remember to pay it on time, which means they never build credit. This is actually a really interesting solution to that. 

 

With that said I also need to know more about the funding model. A few dollars a month is totally 'enough' - many basic credit cards here are free because they collect from merchants - and if anything I think for this kind of 'poor at managing money' customer if actually prefer they had a free tier... Maybe they assume monthly spending will be too low to be sustainable that way. 

 

Definitely still more DD to do. Thanks for all your input so far!

The card is exploitive, real scummy to those not in the know.

 

A secured credit card from a reputable issuer achieves the same result for free, even if you have terrible credit. A secured card gives your deposit back to you at a set date or when you close the account. This hot garbage that wants to sponsor instead charges you monthly and you’ll never see that money back.

 

I think the last thing you should be promoting on the channel is a dubious financial solution aimed at vulnerable people with poor credit…

 

 

[LinusTech]

16 minutes ago, Roswell said:

The card is exploitive, real scummy to those not in the know.

 

A secured credit card from a reputable issuer achieves the same result for free, even if you have terrible credit. A secured card gives your deposit back to you at a set date or when you close the account. This hot garbage that wants to sponsor instead charges you monthly and you’ll never see that money back.

 

I think the last thing you should be promoting on the channel is a dubious financial solution aimed at vulnerable people with poor credit…

 

 

I'm not familiar with the concept of a secured credit card. I found this resource which seems to feature largely negative reviews of secured credit cards from both financial institutions I've heard of and ones I haven't.

 

https://www.creditkarma.com/credit-cards/secured-credit-cards?gclid=Cj0KCQiApL2QBhC8ARIsAGMm-KFPTn0l7ZhcwuDU8zJFlumqwCQ5L7SIj4-8ebuL65QtW9Jh4N1bsl8aAuPjEALw_wcB

 

Admittedly I'm not too familiar with this whole process. I got my first credit card at 16 and I always just used it as my debit card, but paid it back every month. That seems like fundamentally what Extra App is doing.

They charge monthly, but many of these secured cards appear to charge annually. The service charge seems to be separate from the deposit, which Extra doesn't appear to require.. It seems they simply CHECK if money is there rather than requiring you to give it to them. That seems to be their main selling point vs a secured credit card. Am I missing something here?

 

Really appreciate you taking the time. Looking to get as much information as we can. We've avoided most financial sponsors up until now, but this one seemed like we should at least hear them out.

[Needfuldoer]

4 hours ago, LinusTech said:

They charge monthly, but many of these secured cards appear to charge annually. The service charge seems to be separate from the deposit, which Extra doesn't appear to require.. It seems they simply CHECK if money is there rather than requiring you to give it to them. That seems to be their main selling point vs a secured credit card. Am I missing something here?

I think the biggest difference is that Extra is a debit card with a buffer, but a secured credit card still extends a traditional line of credit to the card holder. 

 

I'd be curious to learn more about how they report usage to the two bureaus. (It sounds like they don't report to TransUnion.) Their ad copy just says they "spot you" the charge, automatically "pay themselves back" the next business day, and then "add up your purchases and report them" at the end of the month. Let's say you accrue $800 worth of charges on the card over the month, and you average $3,000 in the bank so you're well covered for it. Do they report that as $800 worth of individual short-term loans that were paid in full? As one $800 short-term loan that was paid in full? If they're not extending a line of credit, I don't think they could call it $800 utilization on a $3,000 limit.

 

4 hours ago, LinusTech said:

I got my first credit card at 16 and I always just used it as my debit card, but paid it back every month. That seems like fundamentally what Extra App is doing.

 

That's the way to avoid credit card interest, but credit scores (in the US, anyway) are based on utilization, not whether you carry a balance. $3,500 worth of charges on a card with a $4,000 credit limit looks much worse than the same $3,500 worth of charges on a card with a $15,000 limit, even if they're both diligently paid off to $0 and never catch a dime of interest. Extra can only have a $0 balance, but it's not a line of credit with a set limit so I don't think they can report it in exactly the same way as an actual credit card.

 

I ran into this when I refinanced last year. I only have one card I intentionally kept a low limit on (in an attempt at minimizing exposure in case the card got skimmed or stolen). I've been putting all my expenses (except the mortgage payment) on the card for the last couple years, hardly ever using cash due to the ongoing 2020. As a result I was almost always using 2/3 or more of the available credit, but I always paid it off every month and never actually hit the limit so I didn't bother raising it. That oversight cost me around 20 points on my FICO score when they did a credit check.

 

5 hours ago, LinusTech said:

Yeah it's kinda weird. It's like there's this assumption that just because people are adults they don't like fun anymore or something.

I'm still twenty in my mind's eye, even though that was *coughmumble* years ago... "Wait, everyone else feels like that too?" is kind of a revelation.

 

Sorry for making assumptions earlier!

[Roswell]

4 hours ago, LinusTech said:

I'm not familiar with the concept of a secured credit card. I found this resource which seems to feature largely negative reviews of secured credit cards from both financial institutions I've heard of and ones I haven't.

 

https://www.creditkarma.com/credit-cards/secured-credit-cards?gclid=Cj0KCQiApL2QBhC8ARIsAGMm-KFPTn0l7ZhcwuDU8zJFlumqwCQ5L7SIj4-8ebuL65QtW9Jh4N1bsl8aAuPjEALw_wcB

 

Admittedly I'm not too familiar with this whole process. I got my first credit card at 16 and I always just used it as my debit card, but paid it back every month. That seems like fundamentally what Extra App is doing.

They charge monthly, but many of these secured cards appear to charge annually. The service charge seems to be separate from the deposit, which Extra doesn't appear to require.. It seems they simply CHECK if money is there rather than requiring you to give it to them. That seems to be their main selling point vs a secured credit card. Am I missing something here?

 

Really appreciate you taking the time. Looking to get as much information as we can. We've avoided most financial sponsors up until now, but this one seemed like we should at least hear them out.

Look at the secured cards on that list from the major banks though, none of them charge any fees. The only ones that do are from the sketchy banks nobody has heard of.

 

 

[Gobmotop]

If this service is targeted towards people who don't have the best credit or has no credit history and needs the activity to start growing their score, wouldn't that mean they'll be heavily incentivized to pay for this service forever. In the US the hardest aspect of raising our FICO score is the average length of credit history, once you close an account that credit history also disappears. 

 

If anybody with no credit history is relying on this service as a foundation for their credit score they'll be left with no choice but to continue paying their subscription fee or completely wreak their average credit history length. 

 

Additionally, those with bad credit still have the option of opening a secured credit card which has the added benefit of having no annual fees. Personally I feel that this service is preying on financially illiterate people by offering a service that major credit card companies already offer for free. 

Another thing to mention is that the consistent utilization of the credit line doesn't increase your credit score, you only really want to use it every once in a while so the credit card company doesn't close the account due to inactivity so for people with bad credit or those who don't trust themselves with having a card with a huge limit, a secured credit card is the perfect solution for them to start building their credit history. 

[starsmine]

I do wonder how it does report, since credit utilization, especially for someone new to credit has such a significant impact on the score.
My main CC is secured, but the issue with that is you have to front the money, people who want to build credit may be unable to do that to get a limit high enough that the card is usable. Secured credit cards also have the issue of none to minimal bonus/cash back. Also, if I use my secured credit to its limit, my score will drop into the mid 650s, a normal credit card will offer me the ability to raise my limit if they know I'm good for it, with secured to do that you have to lock away more money. which you may not have if you are living paycheck to paycheck. Also many banks still have annual fees for secured credit, not just no name ones. USAA for example is 35 dollars a year. 

I would imagine it doesn't report as revolving credit at all, being that its not a credit card, credit history probably isn't affected at all. like the biggest thing preventing me from getting into 800s is my short credit history of 5 years, but to counter that, It should improve your credit mix. However, credit history is only 15% of the score, and they never advertise it would get you a perfect score, just improve what is already there. and it should show a history of paying off loans, and since Payment history is the biggest single factor in credit score, that should help.

I am not sure I see anyway that this will ever hurt your credit score though, other then over drafting and being unable to pay off the short term loan. If it could for example, change my credit mix from "very good" to "exceptional" that is some easy credit points that would be worth picking up right before looking for a big loan.  

I'm not sure I understand peoples concern on how they get enough money, between merchant fees and the monthly fee, I have to imagine they have plenty of revenue. What I do want to know, without applying is they state "lowest plan starting at $7/month!"... what are the tiers of this product. I cant seem to find that information, since it seems to imply there are other tiers. 

So long as its not being advertised as a silver bullet to credit, but part of a diversified plan of action to improve credit, I see no issue on the face of it here.

 

[Needfuldoer]

8 hours ago, Gobmotop said:

If this service is targeted towards people who don't have the best credit or has no credit history and needs the activity to start growing their score, wouldn't that mean they'll be heavily incentivized to pay for this service forever. In the US the hardest aspect of raising our FICO score is the average length of credit history, once you close an account that credit history also disappears. 

 

If anybody with no credit history is relying on this service as a foundation for their credit score they'll be left with no choice but to continue paying their subscription fee or completely wreak their average credit history length. 

 

Additionally, those with bad credit still have the option of opening a secured credit card which has the added benefit of having no annual fees. Personally I feel that this service is preying on financially illiterate people by offering a service that major credit card companies already offer for free. 

It's another example of the Vimes Boots Theory of Socioeconomic Unfairness.

 

Spoiler

“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

 

Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”

 

― Terry Pratchett, Men at Arms: The Play

A several-hundred-dollar up-front payment could be a significant barrier to entry for someone who's rebuilding or just starting out. Extra's $12/mo service charge is much easier to swallow in the short term, even though it adds up over time. (That's less than four years before it surpasses $500 up front.)

 

You're right though, if someone is in a position where they can choose between a secured credit card and Extra, the secured credit card is absolutely the better option.

 

8 hours ago, Gobmotop said:

Another thing to mention is that the consistent utilization of the credit line doesn't increase your credit score

They care more about how long it's been available to you, but how much of it you're consistently using is also a factor.

 

[szalony9szymek]

On 2/16/2022 at 2:46 AM, JonoT said:

Hey!

So we've been contacted by Extra.App to be a sponsor across all Linus Media Group. Our prelim talks and research seem to be very transparent in how they operate, which is a big bonus for us.

https://extra.app/

So what do they do? Well, they offer a way to help build or repair your credit rating with a debit card. (the US only for now)

 

How does it work? 

 

- build or repair credit with a debit card

- "spot" you the funds to make any purchase today but withdraw it from your bank account tomorrow
- app/service links up to your bank account and bases your spending power in buckets also your balance

- at the end of each month, they send your purchase + payment history to credit reporter (Equifax and Experian)

- the service is a monthly fee of $7 to $12 (based on the account type you want)
 

What they don't do:

- sell your information to 3rd parties or anyone

- offer credit card services (for the time being)

- operate outside of the US (for the time being)

- charge you interest on your purchases

 

Notes:

We have read through reviews, and while you could still get a credit card regardless of your credit rating as interest rates would be very high, this is an alternative for someone who doesn't want to worry about owing a monthly balance. 

 

We did bring up this post we saw on Reddit to them, and they assured us they have re-worked internal measures to make sure this doesn't happen a. Also, they've been speedy in responding to our messages and questions. 

Let us know if there's any questions you may have that we haven't thought off or just your initial impressions. 

A paid debit card eeeew

[AbydosOne]

1 hour ago, szalony9szymek said:

A paid debit card eeeew

...that gives you a credit history. That in and of itself could be worth it to someone who has had their credit destroyed by forces outside their control.

[Pickles von Brine]

On 2/18/2022 at 4:19 AM, LinusTech said:

I'm not familiar with the concept of a secured credit card. I found this resource which seems to feature largely negative reviews of secured credit cards from both financial institutions I've heard of and ones I haven't.

 

Figured I would plug in here. A secured credit card is a good thing to have if you have zero credit. I had one for a while that was 200 dollar secured credit. You pay up front the amount of credit that you would like to use. It is honestly rather crap, rates are ass and honestly a lot of the cards suck. However, when I was building my credit it was helpful. I just used it for gas and food. Paid it off at the end of the month. It also prevented me from spending crazy amounts on credit. Something I later got myself into a deep hole with paypal credit (BTW they do 33% APR!!!!!). Thankfully I am in much better shape now (and wiser). Hoenstly, i think credit card companies as a whole are rather scummy, but necessary part sometimes... 

[darknessblade]

As a European i cannot really comment on Anything Creditcard/Credit related

As building Credit is not a thing here.

 

 

 

But if i wher to give a opinion from my limited knowledge of building credit example:

----

USA citizen A has inherited 100000$, but has no credit score at all

USA citizen A Cannot buy a house. no matter if he can buy it in FULL

 

USA citizen B: has 30K debt, but a good credit score

USA citizen B: could buy a 100000$ house.

 

Why is this soo wrong?

----

In my Opinion Anything related to Financial advice, or anything promoting the ability to build credit/loan money, should not be advertised on LMG content.

---

Privacy.org, is different, as this is a service that can be used to prevent scams

Since they do not offer any service other than Virtual creditcards, with no option to buildcredit

---

[Skipple]

2 minutes ago, darknessblade said:

anything promoting the ability to build credit/loan money, should not be advertised on LMG content.

Why?

[darknessblade]

Just now, Skipple said:

Why?

Because of this:

https://www.bankrate.com/finance/credit-cards/are-credit-repair-companies-scam/

https://www.buzzfeed.com/kennysoto/avoid-social-media-investment-scams

https://www.thesun.co.uk/money/15441723/scammers-influencers-dupe-crypto-investors/

 

[dizmo]

18 minutes ago, darknessblade said:

As a European i cannot really comment on Anything Creditcard/Credit related

As building Credit is not a thing here.

 

But if i wher to give a opinion from my limited knowledge of building credit example:

----

USA citizen A has inherited 100000$, but has no credit score at all

USA citizen A Cannot buy a house. no matter if he can buy it in FULL

 

USA citizen B: has 30K debt, but a good credit score

USA citizen B: could buy a 100000$ house.

 

Why is this soo wrong?

----

In my Opinion Anything related to Financial advice, or anything promoting the ability to build credit/loan money, should not be advertised on LMG content.

---

Privacy.org, is different, as this is a service that can be used to prevent scams

Since they do not offer any service other than Virtual creditcards, with no option to buildcredit

---

Kind of true, kind of not. Citizen A can simply buy the house outright with the cash.

13 minutes ago, darknessblade said:

Because of this:

https://www.bankrate.com/finance/credit-cards/are-credit-repair-companies-scam/

https://www.buzzfeed.com/kennysoto/avoid-social-media-investment-scams

https://www.thesun.co.uk/money/15441723/scammers-influencers-dupe-crypto-investors/

 

Half of those don't even apply to this. Not sure what you're getting at.

[Middcore]

45 minutes ago, darknessblade said:

USA citizen A has inherited 100000$, but has no credit score at all

USA citizen A Cannot buy a house. no matter if he can buy it in FULL

 

This is inaccurate. Setting aside the issue of what kind of house you could actually buy for $100k because I am presuming that's just being use as a round number for an example: if you can pay the entire purchase price of the house "in cash" your credit history or lack thereof is irrelevant since nobody has to give you a loan. 

[starsmine]

8 hours ago, darknessblade said:

Because of this:

https://www.bankrate.com/finance/credit-cards/are-credit-repair-companies-scam/

https://www.buzzfeed.com/kennysoto/avoid-social-media-investment-scams

https://www.thesun.co.uk/money/15441723/scammers-influencers-dupe-crypto-investors/

 

Not a single one of those apply though. Im lost to why those were posted. 

[darknessblade]

5 hours ago, starsmine said:

Not a single one of those apply though. Im lost to why those were posted. 

Because the first thing that comes to mind with anything "Financial advice" related to me are 99% of the time  things like "scams"

[szalony9szymek]

On 2/21/2022 at 2:55 AM, AbydosOne said:

...that gives you a credit history. That in and of itself could be worth it to someone who has had their credit destroyed by forces outside their control.

How does a debit card give you credit history? Lol american financials are weird

[AbydosOne]

18 minutes ago, szalony9szymek said:

How does a debit card give you credit history? Lol american financials are weird

It's not a debit card. It's a credit card. It just functions like a debit card.

[mariushm]

I would be fine with them as a sponsor with one condition :  that you list the 7$-12$ a month fee with a big font when you present it and ideally, if you also say it out loud in the speech.  

I have a hunch the "talking points" don't mention it, and the fee is not visible directly on the landing page last time I checked. 

 

Also, there are SECURED credit cards in US which do the same thing and they're free and you get 1-2% cash back on some categories.

On Reddit /r/personalfinance  people often recommend Discover secured credit cards as they're known for reviewing usage after around 6-8 months and upgrading the cards to proper unsecured cards if the user behavior is ok. At that point, your deposit is returned and the card's limits may be increased.

 

Basically, secured card means you deposit some amount in the account ($200 is the minimum at Discover) and that becomes your credit card's limit, and the bank reports every month your behavior and credit score improves if you're good with the card (ex try to keep the usage under around 30%, basically if the limit is 200$ try to have under $50 at the end of the month to pay, you can pay more expensive stuff and pay it the next day, but when you get the end of month report you should have less  than $50 owed, because that's what's reported)

 

imho the 7-12$ fee is a bit scummy ... as the card is addressed to people that have bad credit scores and not always because of their mistakes ... lots of people have stolen identies, or their parents mess up their credit score by taking loans in their names while they're underage...  they may have credit card debts or personal loans to pay back and they're probably paycheck to paycheck paying whatever's left on debts, and they're trying to squeeze 7$ from these people - 7$ could mean gas money for a week or food for a few days. 

They already make a profit from transaction fees from sellers (how would the banks offer cash back otherwise).

 

I'd be totally OK with something like 1$ a month PLUS 50$ at the end of one year IF it can be proven the credit score was improved by some amount of points due to card's usage.    

 

// edit : the reddit thread linked in the first post suggests you need the 12$ account to actually build credit, if that's the case it's even worse.