I have an issue with Duo's diction. I was asked to type (or choose words from the word palette) what I hear. What I HEARD (and my wife corroborates this) was "Gracias, lo voy usar" -- no "a". In turtle mode, the "a" is apparent; but definitely not in the full speed voice version -- it is not even slurred. I think the Duo voices need to be more precise, especially when they are trying to teach.
lo/la/le can be translated as he/she/it (lo is used as the general "it" if I'm not mistaken). "This" is more specific of an identifier than "it" since it also references the relative distance to the speaker (this = near, that = far). I think if you wanted to use "that" in the translation, the Spanish would have to be something like "Gracias, voy a usar esto".