Update 11/24/20: Fold has released more info on their bitcoin earning rewards debit cards. (HT: Phil)
The debit cards come with one of the most complicated reward programs that I have ever seen; a rewards program that will challenge you to find value.
Contents
November 2020 Update
Fold will release two bitcoin rewards earning debit cards – a “Premium” $150 annual fee card and an “Intro” no annual fee version (note: the “Intro” card is not free as it requires a $21 one time activation fee).
This is a partial snapshot of the details:
There are a lot of things that make analyzing the value of these cards challenging. For instance, you might quickly net out the annual fee and the signup bonus to get a first year cost of $100 on the the premium card, but the signup bonus is paid $4.16/month and only in months with $500 in cumulative direct deposits. Analysis is sort of buried a thousand footnotes deep.
Rewards Structure
Most rewards cards provide a flat earning rate (e.g. 1%) on purchases. Some cards might spice it up with higher rates for certain types of transactions (category bonuses). This structure is easy to understand, and it’s clear to see and calculate the value earned.
Fold has gone in a different direction. They are not providing a flat earning rate on all transactions. The reported average reward rate is actually some fuzzy math that is looking at an expected average rewards rate across all card holders (and involves estimating the value of all qualifying purchases and rewards for a period of time – [this sounds quite difficult to do]).
As the rewards program is currently structured, after you complete a debit card purchase you win one of eight potential prizes (each with a different probability of occurring), the following are the rules for the premium card:
So, if you were treating the Fold card like a normal rewards card – make transactions and then check your statement at the end of the month – you would only receive cash back on about 20% of your transactions. The effective average rewards rates:
- Premium Card: (2% Earn Rate) x (20% of the time) = 0.4%
- Intro Card: (1% Earn Rate) x (20% of the time) = 0.2%
Those rates aren’t nearly as exciting as the average rewards rates reported. But it’s not the end of the story, you can try to find value in the prizes that are rewarded the other 80% of the time. My intuition says that might involve low dollar transactions. I mean if you really have a 0.02% chance of winning 1 BTC on any given transaction that’s an EV of $3.20 per transaction that would be a great return on the purchase of a banana (I don’t know if the 1 BTC continues to be replaced at a 0.02% rate during the time period).
It’s sort of an optimization problem to figure out how best to use the card. One thing to note, Fold says that they will frequently change the rewards program (and may cancel it at anytime) so the challenge of finding value would be ongoing.
A few elements that I pulled from the terms:
- PIN debit purchases, and outgoing ACH payment or transfers to a third party appear to qualify as purchases
- Transaction limits: $15,000/month, $2,500/day
- Reward redemption has a 2% fee
The Announcement
Fold has announced that they plan to release a Bitcoin earning Visa debit card in the third quarter of 2020.
Card Details
The card details are still hazy, but the following has been released/reported:
- Card: Prepaid Visa debit card issued by Sutton Bank
Card Network: Visa (Fold is part of the Visa Fast Track Program)ÂReward Structure:“1% to 2% back in Bitcoin for any purchase they make” (as reported in this Fortune article)“debit card but has the rewards levels you’d expect from a credit card” (as reported in this Coindesk article)Signature vs. PIN-Based: Unknown?
Fees: Unknown?Other Requirements: Unknown?Minimum Balance, Transaction Requirement?, ….
Planned Release: 2020 Q3 (July)- Metal Card: Yes [weight not yet disclosed 🙂 ]
We will update this section as new information is released/questions are answered by the Fold Team
Waitlist Details
You can join the waitlist with just an email address. If you use another user’s referral link it bumps them up higher on the waitlist.
Direct Link | DoC Referral Page
After joining the waitlist, if you download the Fold App your account will be credited with 30,000 Satoshis (~$2.19 as of 2020-04)
- This is a relatively small bonus for downloading a fintech app [(1 Satoshi = 0.00000001 BTC), so 0.0003 BTC x $7,251/BTC = $2.18]
- and you won’t be able to cash out until reaching 50K Satoshis (0.0005 BTC [$3.67])
- but the credit can be used towards a gift card purchase though minimum gift card amounts are generally in the $10 – $25 range
Our Verdict
Must defer a verdict until more details of the card are known.
Our expectations aren’t overly high, given the state of the economy/investment, and the failure of a number of similar products (Zero Card, …).
Also Fold seems to offer fairly weak promotions, often too small to warrant sharing. The Fold App/Card has a number of interesting features from a promotional/stacking perspective, but the numbers may not make these features useful in reality, sort of promotional fools gold.
Maybe this is just a startup being conservative with its capital until it reaches a bigger/more growth-marketing focused funding round. Or perhaps you see a better angle have a better use/potential use for the app and card.
We looked at a few specific elements of Bitcoin/crypto reward earning cards in this post announcing that BlockFi has a Bitcoin earning credit card in the pipeline,
Other Fold App Products
Fold App Spin To Win Game
The Fold App features a daily spin to win game.
I can’t find any value here and don’t think it’s worth playing.
If you consider only the virtual currency prizes, I calculate an expected value of about 2.5 cents per daily spin.
EV = 0.03% * 1,000,000 sats + 25% * 100 sats = 300 sats + 25 sats = 325 sats = ~0.025 USD (2.5 cents)
That’s just not enough to tempt me to play.
Fold App Discounted Gift Cards
The Fold App allows you to buy discounted gift cards where the discount comes in the form of Bitcoin back.
I assume there are no clear gift card reselling arbitrage plays, but I’m not familiar with how the Fold App gift card discounts compare to what’s available with other alternatives. If I were to research comparisons, I would start with Chuck’s Complete List of Methods to Buy Gift Cards with Discounts and Bonus Rewards.
All the Best!
History
11/24/20: More card details released
09/10/20: jackgopack4 relays that the debit card waitlist will close Oct. 9th. Still a crap-shoot at this point as we don’t know if the card will be any good. [This must have a been a temporary closure as the
April 2020: Posted
William Charles Chuck Hey Will and Chuck. I think this post could use an update/bump. Full disclosure: I’ve got my referral up on your “share your referrals” page so I’m hoping to get a few if this post gets some traction. The annual fee on spin+ is now $100/year or $10/month, but you can now get 0.5% back in bitcoin on up to $40k through paypal bill pay (which, admittedly has been cut down to only a few payees: Amex personal, BoA, Discover are still up there for me, but I believe Citi is still working for some on there as well). So, if you can max out the $40k in ppbp, that’s $200/month in bitcoin. I’ve accumulated almost $1400 in bitcoin, and I’ve only been using it a few months. You also get 1 “spin” daily along with 1 spin per $10 spent (so you can get about 4030 spins per month). You’re usually only getting about 15 sats per spin on average (but, it is possible to win larger amounts, up to and including an entire bitcoin; obviously that’s very unlikely). I’d estimate this as a small bump in roi on your spend: instead of 0.5% back bitcoin, it’s more like 0.55% – 0.6%. They also have gift cards to purchase with the card on their app along with temporary “boosts” like 3% back at target and speedway, 5% back at lyft. I don’t really utilize these but some folks may find it useful. One great thing, and one possible risk: Because the bitcoin rewards are from purchases, they’re not taxed just like credit card rewards. Fold holds onto these rewards until you specifically request to have them transferred to your wallet (either cold storage or on an exchange like coinbase). So, the value of your current rewards fluctuates along with the price of bitcoin, which is quite volatile. You don’t really have a basis until you request your rewards. So, potentially, you can acquire awards with fold and have them go up substantially in value (as mine have over these past few months) and all of that gain is tax-free. You won’t establish that basis until the rewards are actually in your possession. Of course, the big risk with this is that fold just collapses and doesn’t pay out what you’ve accumulated. So, they encourage you to withdraw rewards (have to be 30 days old and at least 50k sats) but there is some incentive to leave them in fold’s hands. There is a fee to have them send you your bitcoin rewards as well, and that fee can vary depending on some different factors around blockchain which I admittedly don’t understand. The sign-up bonus is 20k sats (about $15) after just one purchase (10k sats for the referrer). You also get, I believe, 2 or 3 months (can’t remember) of the subscription (spin+) for free. The share your referral’s page is here: https://www.doctorofcredit.com/share-your-fold-app-visa-debit-card-links/#comments I’m happy to answer any questions for folks interested in the card. But,… Read more »
Does the fold app still allow 40k Ppbp each month with 0.5% back in bitcoin as of today? Also what is the average fee/percentage you pay for them to send you your bitcoin rewards? I wonder if there is an option for you to sell to them in the App?
The main page advertise either a flat cash back rate of 1.0%-1.5% or a spin, suggesting that probably the expected value of spins are just 1.0%-1.5%. The system is too complicated and I decide it is not worth the mental power to research this
The basic Fold debit card no longer has an activation fee.
The wheel that you spin after each purchase has been changing. With the current one, the cashback amounts are 0.25%, 1%, 1.5%, 4% (but only up to $20 back), or 1000 sats (0.00001000 BTC, currently around $0.51), or extra spins, or very rarely 100% back (up to $50) or 1 BTC. There’s various ways to get extra spins; I usually spin a few times until I get 4% or 1.5% (or 1000 sats is a good percentage if the purchase amount was small).
Way too complex with not that much gain. I’d rather use something like Swipe or CDC
From the bank’s point of view, how are they earning their rates? Are they investing in bitcoin bonds or other crypto-based fixed income securities? If not (i.e. they loan at fed loan rates and convert USD to BTC), I don’t see how they can maintain 1% rates for long.
This looks like a mess lol
I received my invite to order the card via the app, but its a hard pass for me. I don’t see much value especially when the intro plan has an activation fee. I’d rather get the free MCO card with 1% cashback or wait for the Coinbase card. I could always use a credit card with 1.5% or 2% cashback and buy Bitcoin myself.
Are they also going to be providing support with the IRS – IRS now wants you to declare your BTC ownership and that will lead to who knows what. I already know a few people with BTC ownership who played by the rules and are now in IRS limbo.
If you like crypto just buy it directly, do not fall for these gimmicks.
Pretty sure they will live up to their name
You must be a big fan of the Federal Reserve.
what an interesting name for a start-up. i can just see the jokes now if they do fold.