CardsFTW #31: Cards & Rent

Plus, Williams-Sonoma, Wrestling, and a Verizon Teen Card

Bilt Rewards for Renters

Kairos is a venture studio that develops and incubates startup companies to help make life simple and affordable. Ventures include Rhino, which helps renters to afford security deposits, and healthcare companies Little Spoon, Alloy, and Cera+. 

The latest addition to the Kairos studio is Bilt, a rewards program for renters that aims to help renters buy their first home. The Bilt Rewards program includes a credit card. According to the company, the product has been in development for more than three years and publicly launches today (with a card waitlist).

Consumers can earn points in the Bilt Rewards Alliance with partner property managers (including many of the largest institutional landlords) on spending such as rent, lease renewals, and more. Consumers can also apply for the Bilt World Elite Mastercard issued by Evolve Bank & Trust.

Members can transfer Bilt Rewards points to several airlines, including American Airlines or Hyatt Hotels. Users can also redeem points towards a down payment on a house with a qualifying lender or health memberships or goods.

The no annual fee card includes rebates for credit card rent payments at network landlords (often a 3% fee). The more spend you put on the card, the more points you earn back on your rent, starting at 0.5 points per dollar and up to 2 points. (Now you can see where this gets complicated.) I’m not here to be a deals blog, so I’ll let CNBC fill you in on the details.

The Bilt card is coming out with a big launch with massive coverage across all the major affiliate and points sites, which love transferable points. Of note, The Points Guy himself, Brain Kelly, is an investor and advisor (and provides a nice quote and coverage on his site).

I’m impressed with this card on the first review. It is a unique offering with a clear target user. Of course, consumers will continue to get told maybe they should get a Chase Sapphire on virtually every blog post (Chase’s money talks!), but this is a solid entry.

Leaving aside the rewards themselves, helping consumers pay rent via credit card (with no fee), and using that spend to create a traditional open-loop revolving spend and payoff volume on a credit card report could lead to a good score and credit history improvements for renters. Improvements in credit and the rewards towards a down payment on a new home are appealing features in truly helping consumers on long-term financial goals.

While some financial advisors may frown at paying the rent with a card, Bilt also offers “BiltProtect.” BiltProtect promises to debit your bank account automatically when your rent payment posts to your credit card. This debit-like functionality enables users to develop credit history and earn rewards while limiting prospects of paying high-APR interest.

I hope this card does well. It’s a unique offering and goes beyond the standard rewards card offerings.

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Digit Adds a Card

There is a broad trend where many personal finance apps are adding debit (and credit) cards to their offerings. I touched on this in a note about couples finance earlier, and this past week saw another with savings app Digit adding a debit card offer.

The problem with running money movement via a personal finance app is that the connections are flaky. The app needs to maintain an accurate connection to your bank account for data via Plaid, MX, or other account data aggregation tools.

Once you have the data, you also need to move the money, which is frequently done with ACH (which can take 1-3 business days). During the ACH processing time, something could change in an underlying account, leading to funding problems.

Embedding the card account directly into the app solves these problems. In addition, it brings high-fidelity data access, plus the ability to move money internally to the system on the ledger creating real-time capabilities.

However, Digit plans to charge $9.99 per month for the intelligent savings service plus card (vs. $5.00 per month just for the app). That’s going to be a tough sell in a world of many fee-free challenger banking services such as Chime, Ally, or Wealthfront.

I think we’ll see more fintech apps become full-fledged accounts, but providers will need to be very cost-conscious. I could see charging for the Digit service, but charging more for the card (which should bring in enough revenue via interchange to at least cover costs) doesn’t sound like a winning proposition.

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Co-Brand Updates of the Week

Some exciting co-brand updates hit the wire this past week.

First, Capital One announced it won the Williams Sonoma portfolio from current issuer Comenity. I’ll be curious to follow this complete transition as the owner of a Williams-Sonoma Visa card (acquired to earn that 20% signup discount on a sweet espresso machine). The press release hints at a more unified rewards structure, which would be great. Today, cardmembers earn only at one named brand across the Williams-Sonoma portfolio. (For example, a William-Sonoma cardholder doesn’t get extra benefits at Pottery Barn.) Much like Gap’s move to a portfolio-based approach, this should strengthen the program and recognize that customers do cross-shop, even if they have a favorite sub-brand. 

Second, Citibank announced a continuation of its agreement with AT&T for a co-branded credit card. The AT&T program is one of the nation’s oldest and has survived many changes in the structure of AT&T. While the card itself is pretty standard as far as co-brands go (2x at AT&T, 1x everywhere else), it is impressive to see its very long track record continue.

Third, Credit One announced its upcoming partnership with WWE for a co-brand wrestling card. The WWE Champion Credit Card earns 3% cashback rewards on eligible internet, cable, satellite TV, and mobile phone services, 2% cashback rewards on eligible dining purchases, and 1% cashback rewards on all other purchases. Other benefits include WWE merchandise discounts and a card-linked offer program. For a first outing, this is a solid card. I’m surprised not to see specific cashback on WWE tickets but pleased to see a broader offering versus many major sports cards, limiting bonus categories to infrequent purchases (e.g., game tickets only).

Credit One’s co-branded card portfolio has been growing, and I haven’t been paying enough attention. For example, their Best Friends card earns 5% cashback rewards on eligible pet shop, pet food, and supply store purchases for the first $5,000 per calendar year and includes a donation of 1% to Best Friends.

Credit One also offers a NASCAR card, Six Flags card, and Las Vegas Golden Knights card. So we can expect to see them continue to grow the portfolio, and their expertise in subprime underwriting will serve them well in the co-brand space.

Verizon Enters Teen Banking

Finally, this week, let’s talk about mobile phone companies that want to be banks. I understand that mobile phone companies have huge installed userbases. I also appreciate that a cellphone is a lifeline and can be used for payments and carrier billing features (more popular globally than in the US). For many years, carriers have been offering debit cards. When I joined Green Dot in 2006, we provided prepaid cards with co-brands for Boost Mobile and Cingular Wireless. T-Mobile Money. Now, Verizon is offering Family Money, a teen debit card offering like Greenlight.

Will people signup for this just because it says Verizon? I hope not. It’s $5.99 per month. You can get Greenlight for $4.99 per month directly from them. If you’re one of the tens of millions of Chase checking customers, you can get Greenlight in the form of Chase First Banking for $0 per month.

Carriers offering financial products always seem like a bad example of embedded fintech experiences. Mobile phone operators do not have a reputation for excellent customer service or strong customer loyalty. They are a utility function, and people chose based on price and cellular coverage. There isn’t a good reason that I’ve seen to bank with your carrier. Many past carrier financial products have come and gone over the years. Teen debit cards are a good product overall. If you want to dig on this front, analyst Stessa Cohen just published a deep dive into the teenage financial space I recommend. If you want a teen account, skip the Verizon one.

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Thanks for reading CardsFTW, a weekly-ish newsletter about all things debit and credit. CardsFTW is written and curated by Matthew Goldman, Founder, and CEO at Vertical Finance, a challenger credit card startup. If you’re looking for insights into everyday payments beyond deal blogs, please subscribe for free at cardsftw.substack.com. If you enjoyed this, please share it with a friend! Follow me on Twitter @magoldman.