Wall Street Journal has an interesting article on the Wells Fargo & Bilt partnership. According to their reporting the Bilt card is losing Wells Fargo as much as $10 million per month with the card as revenue driver projections made by Wells Fargo were inaccurate. Some key notes:
- Wells Fargo is paying Bilt $200 for every card approved
- Wells expected that around half to three-fourths of dollars charged to the card would carry over from month to month, generating interest charges. The reality ranges between around 15% and 25%
- The bank assumed around 65% of card-purchase volume would be nonrent, generating interchange-fee revenue. The reality is inverted.
- Wells Fargo pays Bilt 0.8% on each rent transactions and doesn’t earn interchange fees on these transactions
Wells Fargo & Bilt are currently renegotiating the contract and have been for months. I’m not surprised that this isn’t generating as much revenue as expected as it’s largely been pushed in the savvy points and miles community. I assume this is partly why Bilt announced changes. It’s hard to know if it’s worth speculatively transferring as Bilt has offered larger transfer bonuses in the past but I don’t expect a lot of positive changes ahead for Bilt.
Just got a couple of fraud charges too. I know it’s utterly unrelated and happens randomly all over the place but it seems like the Bilt cards are prone to it between being a smaller batch of users and Wells Fargo sucking.
FINALLY.
A CARD THAT LETS YOU LEARN POINTS ON RENT.
AND MORE.
Here’s an article from the last year that explains Bilt problem very well https://www.offthebeatenpoints.com/bilt-has-a-problem/
I guess WSJ is finally catching up.
However, the WSJ article newly revealed Bilt’s not hemorrhaging VC money as previously suspected, because they were able to convince WF to eat their shit sandwich for them instead. WF thought they were buying a shortcut to a points program which goes a long way to explain the math problem.
“It’s also important to note that Bilt doesn’t make money on rent payments…” that now shows to be incorrect. Wells is still kicking Bilt .8% for it.
The classic rule of being a parasite is you’re ideally not supposed to let your host organism realize what you’re doing. So now they do/WF likely doesn’t renew, and other banks don’t need them because they already have transfer partners or have their own thing going on.
0.8% is still not enough to cover points cost, so Bilt is still losing money.
I follow miles and points but thought this card is for rent only. If it waly earns 1-1 its nothing special to me. This deal went upside down for Wells. They will look to chnage this deal for sure.
A lot people only use it for rent. It does attract a fair bit to the points enthusiast community. But it’s not a great catch all credit card. And that’s the biggest weakness. If it was 1x rent and 2x everything else, I know I would have tons of spending on BILT card and it will very likely become my primary card.
As long as Bilt has Hyatt as a transfer partner, there’s no way they could ever do 2X on everything. Hyatt points are just too expensive for the bank to buy. Some analysts have estimated that banks pay up to 1.2 – 1.4 cpp for Hyatt points, as opposed to about .4 cpp for foreign airlines like Virgin and Aeroplan.
Rent and restaurants. That’s what I would use it for. I don’t have the card, since I don’t pay rent, and I have 5x card for restaurants.
Those projections are ridiculous, especially since this card was never decently pushed outside the churning community. Makes me wonder what the person who this deal for WF got out of it (with the bank losing $10mil/month they sure don’t have that job anymore)
According to the Bilt CEO, losing $10M a month is a genius customer acquisition strategy by Wells. Lol.
I bet WF will break the contract and Bilt will go bankrupt soon.
The best Wells Fargo can do at this point is to turn off acquisition but they don’t have the skills that Capital One does to price on poor FICO people who won’t default and keep collecting interest to subsidize the higher end products. Approving people with 750+ credit scores is just silly for them.
Maybe their contract has wording that lets Wells change the product structure at will, or determine the acquisition model. But knowing these credit card bank employees they’re not all that smart.
But it should also be obvious to Bilt that if Wells Fargo turned it off and ran down the balances they’ll have nowhere else to pull this scam business model. By 2029 it’ll be worthless without anyone willing to take them up on it.
I mean this may be the best thing ive read in awhile.
Sounds like a ringing endorsement for users of the card 🤣