Future Credit Card Perks Could Include Bitcoin and Rent

Summary

Podcast Summary: WSJ Your Money Briefing

Episode: Future Credit Card Perks Could Include Bitcoin and Rent
Date: April 12, 2021
Host: J.R. Whelan
Guest: Amber Burton (WSJ Personal Finance Reporter)

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Episode Overview

This episode explores the evolving landscape of credit card rewards, especially as credit card companies seek to appeal to younger consumers and adapt to changing post-pandemic spending patterns. The discussion delves into innovative perks that go beyond traditional travel and dining rewards, including rewards aimed at debt repayment, home ownership, investing—including cryptocurrencies like Bitcoin—and even sustainability.

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Key Discussion Points & Insights

Why Credit Card Companies Are Rethinking Rewards

• Pandemic Impact: With travel and dining curtailed, companies have seen less engagement with traditional perks.
  • “We’ve been in a pandemic for over a year and typically credit card companies are giving back, you know, restaurant rewards and travel perks. But…a lot of people haven’t been able to engage with that.” - Amber Burton [01:58]
• Younger Demographic: Companies are targeting younger consumers who are focused on financial goals like getting out of debt or building wealth, rather than just travel and experiences.
• Competitive Innovation: As fintech startups enter the market, established companies are compelled to innovate to keep up.
  • “The more innovative that some of these companies get, it’s really pushing others to do the same.” - Amber Burton [02:37]

Debt Repayment as a Reward

• Rent & Student Loans: Companies are targeting pain points for Gen Z and Millennials.
  • Current roadblock: “As of right now, you have to pay a fee if you’re paying your rent with a credit card. So that’s something that they’re really looking at and is really relevant for young people.” - Amber Burton [02:50]
• Student Loan-Focused Cards:
  • Example: Social Finance Inc. offers a card where 2% cashback can be used to pay down SoFi student loans.
  • New programs are forming, like Bilt (under Kairos), looking to offer rewards toward homeownership.
    • “They are…looking into a rewards program that could go toward home ownership. They’re not sharing too many details…but that’s another thing that young people are working toward.” - Amber Burton [03:39]

Tapping Into the Investing Boom & Crypto

• Retail Investing Trend: Companies want to capture the risk appetite of younger investors.
• Bitcoin Rewards:
  • Blockfi to launch a card with a $200 annual fee and 1.5% cashback, converting cashback directly to Bitcoin.
    • “What’s different about them is they’ll convert that cash back to Bitcoin for every dollar spent.” - Amber Burton [04:34]

Fintech vs. Traditional Issuers: The Innovation Turf War

• Incumbents vs. Startups: Traditional companies like Visa and Mastercard now face pressure from fintechs offering niche perks.
  • “Definitely a little bit of a turf battle in terms of innovation and who can do it first.” - Amber Burton [05:11]
• Sustainable Spending:
  • Example: Aspiration Zero rewards consumers for environmentally conscious purchases, offering benefits for supporting businesses with ethical practices.
    • “They even have a score that rates different companies…Are they hiring for diversity?…The more you shop at these places, the more cashback and different rewards you get.” - Amber Burton [05:45]

Are Traditional Rewards Disappearing?

• Layering, Not Replacing:
  • “The old rewards don’t seem to be going away…this is more of like, an additional option.” - Amber Burton [06:25]
  • Perks like travel, dining, and experiences remain—new features are an added bonus to broaden appeal.

The Financial Upside for Credit Card Companies

• Expanding the Pie: Untapped customers and unused rewards present new revenue opportunities without ending existing lucrative partnerships.
  • “About 30% of rewards credit card holders didn’t even redeem their rewards in 2020…That’s...a big slice of people who aren’t necessarily utilizing what they could. So that’s really the area of opportunity right there.” - Amber Burton [07:38]

What’s Next? The Futuristic Vision

• Futuristic Ideas:
  • Space travel tickets via rewards are a fun concept that some have speculated about.
    • “Could we possibly use these rewards for a ticket to space one day? I think we’re all preoccupied with that idea…” - Amber Burton [08:02]
  • Some “futuristic” perks are already here—such as in-game purchases with reward points.

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Notable Quotes & Memorable Moments

• “What they’re looking for is to get out of debt and to build wealth. So not just your traditional type of perks.”
  — Amber Burton [01:58]

• “As of right now, you have to pay a fee if you’re paying your rent with a credit card. So that’s something that they’re really looking at and is really relevant for young people.”
  — Amber Burton [02:52]

• “Blockfi…they’re the type of company that’s looking more at how can they give back bitcoin rewards.”
  — Amber Burton [04:26]

• “It doesn’t seem like they’re going to be leaving those partnerships behind, but…the upside is really that they’re just reaching another audience that hadn’t been tapped before.”
  — Amber Burton [07:18]

• “Could we possibly use these rewards for a ticket to space one day?... Maybe with credit card rewards it’s a possibility.”
  — Amber Burton [08:04]

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Important Timestamps

• 01:58 — Why companies are rethinking rewards post-pandemic
• 02:50 — New reward targets: rent and student loan debt
• 04:16 — How credit cards are capturing retail investors and offering Bitcoin perks
• 05:11 — Innovation turf war: fintechs vs. legacy card issuers
• 06:25 — Legacy rewards aren’t going away
• 07:08 — Financial upside: capturing unused rewards
• 08:02 — Futuristic ideas: tickets to space and in-game purchases

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Tone and Takeaways

The conversation is lively, practical, and forward-looking, balancing consumer needs (especially young adults’ financial goals) with the drive for innovation in the competitive credit card landscape. Amber Burton succinctly illustrates how rewards are evolving—without losing sight of tried-and-true perks—to capture a wider and more diverse audience, even envisioning bold, futuristic possibilities.

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For anyone curious about how credit card perks are changing—and what might be next—this episode offers insight into trends to watch, including debt-focused rewards, crypto cashbacks, sustainability perks, and even the dream of earning your way into space.

Transcript

[Amber Burton]

Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 countries operate like a local everywhere. Visit d eel.com WSJ.

[J.R. Whelan]

Here's your money briefing for Monday, April 12th. I'm J.R. whelan for the Wall Street Journal. If you have a credit card, you're probably wondering what in the world to do with all the miles you've racked up over the past year and maybe whether there are other things you could be using those rewards points for. Well, credit card companies are taking note and some are revamping their perks programs to attract a new generation.

[Amber Burton]

They're trying to cater to younger customers and younger customers. What they're looking for is to, you know, get out of debt and to build wealth. So not just your traditional type of perks.

[J.R. Whelan]

Personal finance reporter Amber Burton has more on the new rewards programs on the drawing board after the break.

[Amber Burton]

Still running global payroll like A relay race, deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery. And deal plugs into what you already workday. SAP Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.

[J.R. Whelan]

Those credit cards in your wallet, sure they come in handy and some come with great rewards, but a lot of perks are being left on the table that has credit card companies looking to the future to keep customers engaged. Personal finance reporter Amber Burton looked into this and she's with us to discuss. Amber, thanks for being here.

[Amber Burton]

Thanks for having me.

[J.R. Whelan]

So why are credit card companies revisiting their rewards programs now?

[Amber Burton]

So credit card companies are revisiting their rewards programs right now just because of the environment we're in. I mean, we've been in a pandemic for over a year and typically credit card companies are giving back, you know, restaurant rewards and travel perks. But, but right now a lot of people haven't been able to engage with that. So that's one part of it. Another part of it is that they're trying to cater to younger customers and younger customers. What they're looking for is to get out of debt and to build wealth. So not just your traditional type of perks. And then I think another thing, they're really just trying to keep up with their competitors. The more innovative that some of these companies get, it's really pushing others to do the same.

[J.R. Whelan]

But people can already use cash back to Put toward debt. Right. So how are credit card companies marketing these programs when it comes to debt?

[Amber Burton]

Companies are really thinking about, you know, debt in terms of rent and student loans. So, you know, rent is something that a lot of credit card companies have been trying to figure out how they can get into, because as of right now, you have to pay a fee if you're paying your rent with a credit card. So that's something that they're really looking at and is really relevant for young people. But in addition to that, we know student loans. I mean, about 45 million Americans have about 1.7 trillion in student loans in the US right now. That's a lot of debt. It's on a lot of people's minds. So more lenders are really considering, you know, how they can relate their rewards programs to that. So, for instance, fintech startup Social Finance Inc. In March, they were one of the ones that launched a credit card that provides up to 2% cash back, and that cash back can be converted to pay down student loans that cardholders have with that specific company. And there are other, you know, rewards programs that are soon to come on the market as well. Bilt, which is underneath the umbrella of Kairos, another fintech startup, they are, you know, looking into a rewards program that could go toward home ownership. They're not sharing too many details on that right now, but that's another thing that young people are working toward. It's all related.

[J.R. Whelan]

You know, Amber, we've seen a rise in retail investing this year, especially from younger investors. So how are credit card companies trying to tap into their appetite for risk?

[Amber Burton]

I would say they're taking it a step forward by giving it a little bit more of a specific purpose. And so you see this with, for instance, some of the companies like Blockfi, an online lender for investors with crypto assets. And so they're the type of company that's looking more at how can they give back bitcoin rewards. So they are investing in their Bitcoin rewards program right now, later this year, actually. And the card that they are launching is set to have about a $200 annual fee, and it will pay out, like you were saying, that 1.5% in cash back. But what's different about them is they'll convert that cash back to Bitcoin for every dollar spent. So that's a little bit different. It's just a more specific option with that cash back.

[J.R. Whelan]

You know, you mentioned fintech companies. They've been trying to get in on the credit card business. It almost Sounds like there's sort of a turf battle going on between the giants like MasterCard and Visa and the newcomers.

[Amber Burton]

Yeah, definitely a little bit of a turf battle in terms of innovation and who can do it first. That definitely appears to be the sentiment when you talk to the people at the different companies, because there is so much opportunity in this space and so much that hasn't been done. I think one area that comes to mind that was kind of wide open was the environment. There are a lot of people who are interested in sustainability right now. So what kind of rewards can be given in terms of sustainability? And so one that comes to mind is aspiration zero. That's a credit card that's rewarding people for, you know, reducing their carbon footprint and shopping at places that have a lower carbon footprint and are good for the environment. And they even have a score that rates different companies that you shop at for what are their labor practices? Are they hiring for diversity? And so the more you shop at these places, the more cash back and different rewards you get. And so I think that's an audience that hadn't really been tapped into before that they're kind of speaking to right now.

[J.R. Whelan]

Okay, but the credit card companies still have millions of existing customers who rack up rewards in more legacy programs like restaurants and travel, which they might return to as we ease out of lockdowns. What happens to them?

[Amber Burton]

So this is really just integrating in more rewards. The old rewards don't seem to be going away. You know, this is more of like, an additional option. So I spoke to, you know, people at various credit card companies and all. A lot of what they're adding on now with innovation, whether that be eventually helping you pay down debt or helping you save for a home, they're still going to have those traditional flashy rewards of like, use this for your local gym or use this to go to this, you know, swanky restaurant. But here's another option, just to kind of, you know, open up and get more people in to these programs. But, yeah, the traditional programs are not going away. This is an added bonus.

[J.R. Whelan]

But the credit card companies split revenue with the airlines and restaurants and other companies that are part of these reward programs. So where do they see the upside here financially from moving toward these changes?

[Amber Burton]

I would say it doesn't seem like they're going to be leaving those partnerships behind, But I mean, the upside is really that they're just reaching another audience that hadn't been tapped before. I mean, Bankrate has this stat that got a lot of attention that about 30% of rewards. Credit card holders didn't even redeem their rewards in 2020. And now you could say maybe part of that has to do with the pandemic. But that's still a big slice of people who aren't necessarily utilizing what they could. So that's really the area of opportunity right there.

[J.R. Whelan]

So, Amber, we've talked a lot here in this conversation about the future and what plans are for future types of rewards and things like that, but anything futuristic on the drawing board at some of these credit card companies?

[Amber Burton]

Yeah, I think one thing that's futuristic, of course, is there's that idea that could we possibly use these rewards for a ticket to space one day? I think we're all preoccupied with that idea that we could go to space and hey, I certainly might not be able to afford it, but maybe with credit card rewards it's a possibility. So that's one thing that we like to throw around and we're hearing people throw around is a really cool idea. And something maybe that might have seemed futuristic at one point that's already here is you can use it for in game purchases. I mean, we have more time at home. We're playing those video games now. You can use those rewards for those in game purchases.

[J.R. Whelan]

Wow. Space and gaming. So I guess keep your hands on the game controller and keep reaching for the stars.

[Amber Burton]

Yep. You can't lose with that.

[J.R. Whelan]

All right. That's Wall Street Journal reporter Amber Burton. Amber, thanks for coming on the show.

[Amber Burton]

Thanks for having me.

[J.R. Whelan]

And that's your money briefing. I'm J R Whelan for the Wall

[Amber Burton]

Street Journal deal replaces fragmented Payroll vendors with one global system. No third parties. Hire, manage and pay teams in 150 plus countries. Operate like a local everywhere. Visit del. Com WSJ.