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Personal Finance

How Does the Cents App Work?

Updated Mar 01, 2022   |   4 mins read

Cents is a relatively new app that just completed its Kickstarter campaign in Fall 2017. The idea behind Cents is that it rounds up your purchases to the nearest dollar and uses those extra cents to pay down your debt.

If it sounds similar to Acorns, that’s because it is. The founder of Cents, Joel Ehorn, says that he came up with the idea after using an app that rounds up your purchases and puts that amount into an investment account.

After realizing that he had lost money on his roundup investment, he started to think about what would happen if he had used those cents to pay down his debt instead. So he created the Cents app to do just that. This review will cover everything you need to know about the app.

How the Cents App Works

The Cents app is free to download. To use the app, you’ll need to enter information for three types of accounts.

First, you specify your “roundup” accounts. You can link any debit, checking, or credit card account as a roundup account. Every time you make a payment from one of these accounts, Cents will automatically round that purchase up to the next dollar and use the difference to apply to your “debt” account.

The debt account can be a mortgage or home loan, car loan, credit card, student loan, line of credit, or any other type of debt account that has an outstanding balance.

Finally, you select a “payment” account, which is the savings or checking account from which your rounded-up payment gets withdrawn and applied to your debt account. Once a week, Cents withdraws your accumulated roundups from your payment account and applies them to your debt account.

What Are the Benefits of Using the Cents App?

The main benefit of using the Cents app is that you get a little extra help every month paying down your debt. It takes your spare change and automatically applies it to your debt payments. Once you set up your accounts in the app, there’s nothing else for you to do other than to watch your outstanding debt decrease every month.

Is the Cents App the Best Deal?

Downloading and installing the Cents app is free, but it is not free to use the service. Cents charges a $3 monthly fee to cover the costs they incur from the different processing companies they use.

Cents says that users can save an average of $13,397 in interest on credit cards, $1,749 in interest on student loans, $14,683 in interest on mortgages, and $541 in interest on car loans.

When you are trying to pay down debt, especially on high-interest accounts like credit cards, it can feel like you never make any progress from month to month. Every little bit extra that you can apply to principal payments every month can end up making a big difference. And the Cents app follows the belief that it can make a big difference over a few years.

There are quite a few apps that take advantage of using your spare change in a variety of ways. For example, Acorns utilizes rounding up your purchases to the next whole dollar and putting that money into an investment account. Users can choose one of five portfolio options ranging from aggressive to conservative.

Rather than simply rounding up, Digit is an app that analyzes your spending habits to determine small amounts of money it can withdraw and place into a separate savings account for you.

Qapital is a rules-based app that saves money from round-ups but also allows you to set up unique saving rules like “move money into savings every time this football team wins.”

None of these apps, however, use the money they collect to directly pay down debt accounts.

Bottom Line

The Cents App has not been around very long, so it is hard to know for sure how accurate its debt savings claims are. In the end, the benefit depends upon how many purchases you make on roundup accounts each month, how much debt you have, and how much interest you pay on that debt.

Make the most of Cents by linking as many roundup accounts as possible and choosing your debt account with the highest interest rate.