Buy now, pay later company Affirm has announced that they will be launching a card later this year. There is a waitlist that users can join now. It will follow the same buy now, pay later model via installment payments that Affirm currently offers. Rather than a credit card this is a debit card, users will be able to link the card to an existing bank account and then they can choose to either pull funds from the existing account or enroll in the buy now, pay later option.
Now, as with most fintechs, once it’s clear that the original product is saturated, Affirm is offering a sub-standard product, a credit card with no bonuses (points, $$$, etc). It has 0 fees, but the point is any savvy customer knows how to avoid fees or obtain a card where the benefits outweigh the fees. The credit card market is over-saturated and Affirm is adding nothing to it.
Affirm built their business on the back one-off purchases. Peloton (1/3 of their revenue), Gucci, furniture, etc. Luxury items that financing makes total sense for. Affirm became the middle man for these brands and drove sales for them by offering 0% financing to customers without the need for credit checks. Affirm’s business is built upon the reality that a lot of younger Americans want to finance a lifestyle without impacting their credit score, which could have real impact upon their ability to obtain a mortgage in the future (much of this fear is overblown).
Essentially, customers interested in luxury goods, usually have better credit. They are not the underbanked. It’s just they don’t want their credit pulled to obtain financing great than 30 days at 0% interest. Affirm offers this product through ‘installment loans’ paid in monthly payments.
There’s no magic to the financing provided, but the ability to drive sales for luxury brands is the magic. Peloton, Gucci, etc. let Affirm deal with the problem of being a financing company. It’s really a marketing company than a financing company. This credit card is a classic example of a product searching for a customer that doesn’t exist.
No SUB, no app
I’m highly, highly interested.
I thought Affirm is part of Lexis Nexis, but I can not find such info on Affirm website. If it is correct, I really doubt whether Lexis Nexis has a license to issue credit card
Not sure how many of your readers are underbanked or drowning in so much revolving debt that they would want this product, which has no rewards earning structure and could potentially still incur interest:
“Your rate will be 0–30% APR based on credit, and is subject to an eligibility check. Options depend on your purchase amount, up to $17,500, and a down payment may be required.”
Payment options through Affirm are provided by these lending partners: Cross River Bank, Member FDIC; Celtic Bank, Member FDIC; or Affirm Loan Services, LLC. California residents: Affirm Loan Services, LLC is licensed by the Department of Financial Protection and Innovation. Loans are made or arranged pursuant to California Financing Law license 60DBO-111681.
The funny thing is, I swear I read an article that mentioned the founder started Affirm because he felt that banks were overprofiting from this same segment of society. A cynical reader of what you’ve quoted would basically say that’s exactly who they are now targeting and their core product is either a trojan horse or they’re getting away from their vision.
This is not for people with good credit or a typical DoC reader looking for SUB. This is for international students and scholars who don’t have any credit history, but always pay bills on time. This is for them to build credit history as a starter card, when nobody will approve them a credit card.
nice! have been waiting for this.
All these fintech companies are full of SWEs who read and profit from this site, so they’re too smart to give away big SUBs like legacy companies. No way the Affirm card will be compelling in any way
agreed. what’s the point of this card? seems to offer absolutely nothing unique
But you could buy now and pay later! /s
And on the other side of the transaction we’re too smart to sign up for these products. No bonus + no compelling rewards structure = no customer.
Credit card SUBs are here to stay because the instant banks stop using them, we will stop using their products. Banks have accidentally created a vicious cycle where they must issue higher and higher bonuses just for the chance of us being an ongoing customer. The bank loses and the consumer wins.
Furthermore, it’s not like these financial institutions are losing money either. Amex had a net income of over a billion dollars last quarter. They are still ensnaring plenty of less savvy consumers they can make lots of money on through interest. The Doc readers on the form and the credit card company are beneficiaries of this system.
Let’s milk it while we can.
Ignoring collusion, the banks can easily win, but it’d be a slow win. I won’t tell them how, there’s a chance they debate the same issue, but it’s super obvious when you actually study the market.
I APPROVE your comment. Well done Dylan!!
“Full of SWEs” = Society of Women Engineers?
not sure if this is a joke, but I’m sure some readers/upvoters are confused so I’ll reply regardless…
software engineers
While we’re at it, what are SUBs? Sign up bonus?
Yes