Credit Card Reviews
Money at 30: Revisiting Vital Card — Should You Invest?
It was February of 2018 when I got an email from someone working at the startup Vital Card. They were reaching out to ask if I might peruse their site and do a review of their upcoming product — then set for a fall release. Indeed, I did end up doing a review of sorts but, without the card in hand, I instead focused on reviewing the very premise of the card and whether it was inherently problematic. Ultimately, I determined it might not be such a bad thing and was intrigued to see what others thought. Well, for a long while, it seemed the reaction was pretty tepid as the card’s release kept getting pushed back and, until recently, seemed 100% dead. That was until a few weeks ago when Vital Card performed a true Lazarus-like move, with an equity crowdfunding campaign potentially playing the role of savior.
So, with Vital once again pitching its planned product, I figured it was time to check in to review the concept of the card, offer my updated thoughts, and share whether I think you should invest in the company or not.
The Concept of Vital Card
In case you missed the first time or forgot since then (and who could blame you in either case?), Vital is a credit card concept that encourages referrals. Billing itself as “the world’s first social credit card,” the idea is that, in addition to your standard cashback rewards, users can unlock bonuses by getting their friends to sign up for the card as well. These bonuses are determined by your Referral Score.
As the card’s page explains, for every person you directly refer to Vital Card, you’ll increase your score by 4 points. Then, for every person they refer, you’ll get an additional 2 points. Lastly, you’ll also earn 1 point for every person that that friend of a friend referred. How this translates to cash is that, each month, 1% of everything spent on Vital cards will be put into a pot and then allocated based on Referral Score. Of note, while the company says that these bonuses are “for life,” you’ll need to spend at least $250 a month on your card in order to be eligible for that period’s payout and all of your referrals will need to be active (spending at least $1 per month) and in good standing.
Obviously this arrangement has raised more than a few eyebrows as it sounds remarkably similar to Multi-Level Marketing (MLM) — or a sort of scheme best described in terms of Cairene architecture. However, in response to this, Vital has noted that they’re not like MLMs because, for one, they’re not technically selling anything. Since their card will have no annual fee, there’s no upfront expense for cardholders. Additionally, they point out that the sharing aspect of the card is optional. Even though it is the main focus of their promotion, all cardholders are still entitled to 1% cashback regardless of whether they have any Referral Score.
Personally, I’m actually inclined to agree with Vital’s assessment and think they make some compelling points. Therefore, I don’t think it is actually akin to MLMs, as it might seem on the surface. That said, like oh so many multi-level schemes, it seems incredibly likely that only a handful of people will be making money from Vital, while others are mostly stuck with their regular cash back. Again, this isn’t terrible since the card does have some other benefits, even if they aren’t as competitive as other cashback credit card products.
To that point, another aspect of Vital card is the ability to increase your monthly cashback amount. In addition to your Referral Score, users will also earn Activity Points, allowing them to raise their cashback to 2% or even 5%. According to Vital’s FAQ, “Every member can earn activity points by completing pre-determined monthly activities that are based on good credit behavior, socially responsible spending, life experiences, and daily spending.” That explanation seems a bit more nebulous than the Referral Score outline, so it’s hard to say whether I think it will work or not. Still, if you could manage to unlock 5% cashback on the regular card it would likely be worth it even without any cash bonus.
Vital’s Equity Crowdfunding Campaign
Currently, Vital Card is seeking investors via the site Start Engine. For this campaign, they’ve valued the company at $10 million, with shares going for $1.03 each. However, the minimum investment is $499. At this time, the site shows a total of $236,137 raised from 221 investors.
Interestingly, like with traditional crowdfunding campaigns, Vital is also offering perks to investors at different tiers. For example, those who invest $500 or more will score a Vital t-shirt and the first 500 investors at that level will unlock a special Cobalt Blue Founders Edition Vital Card. Meanwhile, larger investors can get boosts on their pre-launch referral score along with other special items such as hoodies and hydro flasks.
I should also note that the campaign reveals that the card’s official debut is still a ways away. In their materials, they show a Q3 2021 launch. However, a big development (at least to me) is that Vital will be partnering with Evolve Bank and Trust for the project. Evolve has previously worked with the likes of Yotta Savings and is also involved in the upcoming BlockFi Bitcoin Rewards Credit Card.
In my view, while giving investors boosts on their Referral Scores makes sense, it also plays right into my fear that the product will really only be beneficial for a select few, which could doom its prospects in the long run as people may abandon it if they’re not getting the return they were hoping for. Granted, I think that offering them an additional percentage on their earned score is better than just gifting them a set number, but my point remains. It also makes me wonder if you’re really investing in the company or just trying to get a leg-up in the game once it eventually goes live.
For more details on Vital’s campaign, I’d recommend checking out their investment page for yourself — and, if you do end up investing, I’d love to know your thoughts.
Final Thoughts on Vital in 2020
At the end of the day, I still don’t think Vital’s model is a fundamentally bad idea. However, at this point, they’ve already been beaten to the punch in some degree by others such as Zero Card and X1, which both feature a referral bonus element — although the latter also has yet to actually launch. Unfortunately, the quick demise of Zero card might not offer much encouragement for Vital’s prospects either.
While it does now seem more likely that Vital will come to fruition — something I certainly wouldn’t have predicted even a few months ago — I’m still not betting on its long-term success. As a result, I’m no longer very interested in owning a Vital card let alone investing in the company (although I reserve the right the change my mind on the former point). I’m also a bit nervous about how the campaign will shake out given the past delays and long lead time until this planned launch. Nevertheless, I will definitely be keeping an eye on the product and will be ready to eat any amount of customary crow should it become necessary.
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