Reduce your student loans, invest in Bitcoin: credit card points get creative

By AnnaMaria Andriotis and Amber Burton

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 space travel or pay off your student loan?

Visa Inc., Mastercard Inc. and the big banks are revising their rewards programs to meet the needs of young customers who want to use their cards to build wealth or get out of debt, not just to accumulate benefits. Newcomers to financial technology, or fintech, offer niche rewards to better compete with established players.

Companies are also re-evaluating travel rewards programs. According to Bankrate, around 30% of rewards credit card holders did not redeem rewards in 2020, leading some issuers to believe there is a market for more innovative rewards. The effects of the pandemic on travel and dining have only reinforced this surge. One day, intrepid spenders could redeem hundreds of thousands of card points for a ticket to orbit, according to Visa.

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

Reduce your student loans

With some 45 million Americans owing 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 payments. .

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

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

Cover your rent

Another big expense for cardholders? To rent. 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 the acceptance of cards for rent payments, but in the past their efforts have not progressed much due to the 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 incentivize buying with a reduced 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 claims it plants a tree with every purchase. It also tracks the carbon footprint of the user’s purchases and ranks merchants 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 Andrei Cherny.

Synchrony Financial, America’s largest store credit card issuer, will allow customers with its co-branded health and wellness spending-focused credit card the opportunity to redeem points for newly planted trees in April. . 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 fintech 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 for 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, the UNFCCC and Our World in Data in collaboration with researchers at the University of Oxford measuring the impact of carbon dioxide of each transaction. A corresponding application includes a carbon footprint calculator for purchases. Doconomy says he’s also figured out how to value intangible purchases such as medical bills and haircuts.

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

Earn cryptos

More and more fintech are launching rewards programs related to cryptocurrency.

BlockFi, an online lender for investors with crypto assets, has announced that it will launch 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% 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 spin a digital wheel to determine what rewards they want. get. Options include a 1% or even 100% cash back that 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 US crypto rewards debit card that will refund 1% in bitcoin or 4% in Stellar lumens, another cryptocurrency. Cardholders can make purchases with bitcoin or any of the more than 50 other assets supported by Coinbase in the United States. Coinbase converts the asset to US dollars when it sends payment to merchants, which 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 shopping 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 sports streaming services at reduced price or free.

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

(END) Dow Jones Newswires

04-03-21 0544ET

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