Today San Francisco-based debt management platform ReadyForZero announced the launch of ReadyForZero Plus, a secure payments tool that helps people pay off their debts directly from their ReadyForZero account. Since the company’s launch in early 2011, it has helped consumers pay off over $25 million in personal debt by helping people track their debts, and providing a plan to pay them off.
The company started in startup accelerator Y Combinator’s summer 2010 class, and aims to help people control and reduce their personal debt online. Users link their accounts, from credit cards to student loans and any other debts they might have, and use the platform to create a plan to get out of debt, recommending the optimal monthly payment to pay to each debt based on paying off the loans with the highest interest rate first. Until today the tool helped people create a plan and stick to it by offering resources and tips, but people couldn’t actually pay down their debt using ReadyForZero.
ReadyForZero Plus means that users can decide the monthly payments they want to put towards each debt, and process those payments securely from their online account. Co-founder and CEO Rod Ebrahimi said in an interview that the new payments feature is a way to further differentiate the platform from other online savings tools like Mint. ”Now we actually say that we help you take action,” he said. “It’s much more expansive than what Mint has ever been able to do.”
Since users are connecting their bank accounts to process payments, ReadyForZero will also send notifications to help people pay down their debt, for example encouraging someone to put an extra payment towards their debt when a large deposit is made. And in addition to showing basic details about a person’s debt on their dashboard, including the number of months it will take to pay it off, daily interest, and total debt, the dashboard now also shows the total amount of interest saved by users making payments through the platform.
“Now that we can move the money, we can see how much interest every single one of your payments is actually saving you,” Ebrahimi said.
While connecting loans and making a debt management plan are free, the new payments feature is $4.99 per month. The company’s primary business model until today was its ReadyForZero Savings Platform, which lets lenders advertise to users, or offer products with lower monthly payments or lower interest rates, with a fee paid to the company if a user accepts the offer. Ebrahimi said they don’t pitch credit cards, but rather deals from companies like LendingClub that help consolidate debts at lower interest rates.
For mobile users, the company launched its first iPhone app in May 2012, and Ebrahimi said they’ll be adding the payments functionality into the app in the near future. They will also be launching an Android app, and working to automate payments so users don’t have to manually set up payments. Right now the company is only available for U.S. customers, though Ebrahimi said they’ve had international demand primarily from the UK, Australia and Canada, and they hope to launch there in the future.
For consumers looking to cut down on their debt, there are a variety of offline and online resources, from debt settlement services, to online financial tracking services like Mint, and tools targeted at specific groups like StudentLoanHero’s tool for people with student debt. Ebrahimi said while 20 percent of their users are people paying off student loan or non-revolving debt, they have a much broader focus. “We support all different kinds of debts,” Ebrahimi said. “We’re not just focused on student loan debt.”
While they already had a large base of users trying to get out of debt on the platform, adding the ability to make payments should help close the loop for users who have good intentions of paying their debts, but lose that resolve when they leave ReadyForZero’s website.