Credit Card Points: Then Reduce Your Student Loans, Invest In Bitcoin

Credit card rewards generally fall into two categories: ambitious (upgrade to first class flight, get free hotel stay) or practical (get cash back). But what if you could cover the cost of a trip to space or pay off your student loan?

Visa Inc.,

MasterCard Inc.

and the big banks are re-examining their rewards programs to meet the needs of younger customers who want to use their cards to build wealth or get out of debt, not just to accumulate benefits. Upstarts in financial technology, or fintech, offer niche rewards to better compete with established players.

Companies are also re-evaluating travel rewards programs. About 30% of rewards credit card holders did not redeem rewards in 2020, according to Bankrate, which has led some issuers to believe that there is a market for more innovative rewards. The effects of the pandemic on travel and meals have only reinforced this surge. Someday, intrepid spenders could redeem hundreds of thousands of card points for an orbiting ticket, according to Visa.

Here are five reward offerings you’ll likely see in the years to come, according to executives in the card industry and fintech companies.

Reduce your student loans

While some 45 million Americans owe an estimated $ 1.7 trillion in student loan debt, more lenders are considering rewards programs that would allow cardholders to put money back on loan repayments.

In March, startup Fintech Social Finance Inc. launched a credit card offering up to 2% cash back, which can be converted to pay off student loans that cardholders have with the company, between other.

In the future, similar cards would be presented to college graduate students and as a redemption option on existing cards, says Mladen Vladic, general manager of loyalty at Fidelity National Information Services Inc., which administers the programs. of rewards from many banks.

Cover your rent

Another big expense for cardholders? Rental. Many landlords do not accept credit card rent payments due to fees charged by the card issuer and the payment network.

Visa and Mastercard are working on initiatives that they hope will increase card acceptance for rent payments, but in the past their efforts haven’t gained much due to fees.

However, some companies are starting to offer rent-related benefits. In the coming months, fintech company Kairos plans to launch Bilt, a rewards program that allows consumers to pay rent while generating points that could be used towards a down payment on a home, according to the company’s website. . Kairos declined to comment.

Invest in a better world

Spend money, save the planet? More and more card issuers are turning to rewards programs that encourage purchases with a lower carbon footprint, as young people place more emphasis on the social impact of their financial decisions.

Aspiration Zero, a credit card launched in March, offers up to 1% cash back and says it plants a tree with every purchase. It also tracks the carbon footprint of the user’s purchases and ranks merchants based on social issues, including whether they have a diverse workforce or fair labor practices. Customers get extra cash back when they buy from companies with higher scores. The Aspiration community has planted more than 5 million trees in Central and South America, Madagascar, Kenya and the United States, according to co-founder and CEO Andrei Cherny.

Synchrony Financial,

America’s largest in-store credit card issuer, in April, will allow customers with co-branded credit cards focused on health and wellness spending to redeem their points for newly planted trees. The effort is part of a coalition Mastercard launched last year with card issuers and forest restoration groups to plant 100 million trees over five years.

Doconomy, a Swedish financial technology company, recently launched its DO credit card in collaboration with Finnish bank Ålandsbanken, Mastercard and the United Nations Framework Convention on Climate Change. To promote personal responsibility in the face of climate change, the card freezes the ability to make purchases when those purchases reach a carbon footprint limit for the month. The limit, which cannot be exceeded, is set based on data from S&P Global, UNFCCC and Our World in Data in collaboration with researchers at the University of Oxford measuring the carbon dioxide impact of each transaction. A corresponding application includes a carbon footprint calculator for purchases. Doconomy says she has also worked on how to assess intangible purchases such as medical bills and haircuts.

For traditional rewards programs, card companies are also considering offering rewards for green card purchases, such as bike rentals and electric vehicle charging, according to Visa.

Earn Crypto

More and more fintechs are launching cryptocurrency-related rewards programs.

BlockFi, an online lender for investors with crypto assets, has announced that it will roll out a credit card with a Bitcoin rewards program later this year. The card, which is expected to have an annual fee of $ 200, will pay 1.5% in cash back, which the company will convert to bitcoin, for every dollar spent.

Mobile payments startup Fold Inc. offers a Wheel of Fortune-style rewards program: Every time cardholders make a purchase with their Fold debit card, they can spin a digital wheel to determine what rewards they want. ‘they get. Options include 1% or even 100% cash back which is converted to bitcoin and, in much rarer cases, a full bitcoin, worth around $ 59,000 on Friday.

Coinbase Global Inc., the largest US-based cryptocurrency platform, plans to roll out a debit card with crypto rewards in the US that will refund 1% in bitcoin or 4% in Stellar lumens, another cryptocurrency. Cardholders can make purchases with Bitcoin or any of the over 50 other assets supported by Coinbase in the US Coinbase converts the asset to US dollars when it sends payment to merchants, which together with many assets, involves a charge to the cardholder of 2.49% of the purchase price.

Improve your in-game purchases

Video game developers are looking to roll out their own co-branded reward cards that would allow customers to earn points through games and real-world purchases and redeem them for in-game items, such as better weapons. or cars, according to people familiar with the discussions.

Riot Games, which developed League of Legends, is looking to launch a credit card in the United States that distributes points that can be redeemed for in-game experiences, people say.

Cardless Inc., a fintech company launched last year, is developing co-branded sports team-linked credit cards that will reward users with perks like video chats with former players and streaming services. sports at reduced or free prices.

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Read the full report.

Write to AnnaMaria Andriotis at [email protected] and Amber Burton at [email protected]

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