Credit Card News
Wells Fargo Reportedly Losing Millions Per Month on Bilt Program
A popular and unique credit card offering is reportedly causing financial headaches for its issuing bank.
About the report:
According to a report by the Wall Street Journal, Wells Fargo is losing approximately $10 million a month as a result of its partnership with Bilt to issue the Bilt Mastercard. As the Journal explains, this loss is largely a result of the card having “savvier” cardholders and the product’s unique perks.
First, while Wells Fargo anticipated that around 75% of cardholders would carry a balance on the card from month to month, the actual figure has stayed between 15% and 25%. On top of that, rent payments — which do not earn the bank any interchange fees — have remained the majority of spending on the card despite the bank projecting that 65% of purchases would be non-rent. Currently, the Bilt Mastercard does require customers to make 5 purchases per month with the card in order to earn points.
As a result of these issues, Wells Fargo is said to be renegotiating its contract with Bilt. Moreover, according to WSJ, the bank does not intend to renew its contract with Bilt when it expires in 2029 (unless the above issues change).
What they’re saying:
Commenting to the Wall Street Journal a Wells Fargo spokesperson said, “As with all new card launches, it takes multiple years for the initial launch to pay off. We look forward to continuing to work together to…make sure it’s a win for both Bilt and Wells Fargo.”
Meanwhile, a Bilt spokesperson told the outlet that the report “is an inaccurate representation” of the partnership and added that Bilt is “committed to a long term partnership with Wells Fargo that benefits all parties.”
My thoughts:
It makes a lot of sense that the company would have a savvier customer base than most. After all, Bilt counts The Points Guy himself (Brian Kelly) among its advisors and has garnered more than a few headlines on credit card enthusiast blogs thanks to its often generous Rent Day transfer bonuses. Plus, with rent obviously being a spending category not covered by any other cards it’s not surprising a lot of those flocking to the product are those who know how to extract the most value from their rewards cards.
That said, Bilt has also been quick to react to possible loopholes. For example, it added language that disallowed earning points on transactions made through “third party wallets, cards, or other products” — which seemed aimed at Curve and its abilities to potentially make every day Rent Day. Therefore, I feel as though the company will be able to find some tweaks to at least throw Wells Fargo a bone. The most obvious to me would be raising the number of purchases cardholders need to make on the card each month from 5 to, say, 10. Perhaps this could also be adjusted slightly so that all non-rent purchases earn points immediately but the points earned from rent only “unlock” after the 10-transaction minimum is met.
The bottom line is that, with this report now out there, don’t be too surprised if the Bilt Mastercard becomes slightly less customer-friendly with time. In the meantime, it will be riveting to watch how this partnership between Bilt and Wells Fargo plays out.
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