A new credit card is coming, with a touch of Silicon Valley

When Deepak Rao founded his first startup, in 2011 he placed all of his business expenses on two personal credit cards, with a combined credit limit of around $ 3,000. “They were totally maxed out all the time,” he says. “To this day, my credit score has never recovered. Even after four years of working Twitter with the salary of a product manager, Rao still couldn’t qualify for credit cards with the kinds of perks he wanted: ones that paid for vacations or gave him. points in the places he liked. Shopping.

With his second start, Rao tries to solve this problem. The X1, a new credit card, is designed for people looking for premium benefits, with or without a premium credit score. It uses a new underwriting process, which is linked to a user’s bank account to determine credit limits based on cash flow. The card promises credit limits up to five times higher than the average card.

The card itself is stainless steel, the kind of piece of art it’s announcement like making a nice noise when you drop it, but it’s meant to be used digitally, like apple card. It has a sleek app that gives users the ability to create disposable “virtual” cards, cancel subscriptions with one click, and perform anonymous transactions without giving out a real name or card number. His points are redeemable with a list of merchants frequented by the stereotypical technical brother: Peloton, Patagonia, Allbirds and Airbnb.

Maybe that’s why the X1 has become something of a Silicon Valley darling, with a waiting list of over 350,000 people, according to the startup. Its investors include Affirm CEO Max Levchin, Box CEO Aaron Levie, and Yelp CEO Jeremy Stoppelman. “I think this is Silicon Valley’s response to American Express, which is really for the old guard at this point,” says David Sacks, the venture capitalist and former PayPal, who sits on the board of administration of X1 and uses the card itself.

Other credit card startups have sought to fill in the gaps in the market. Brex, which is now valued at nearly $ 8 billion, created a map to work for startups that had funding but no income. Carat does something similar for creators excluded from traditional funding. These two cards solved a credit problem for a new type of business and offered benefits specific to their needs. The X1 hopes to do the same for consumers, especially those who are mostly young, well paid, and live on their phones.

The X1 will start rolling out cards on its waitlist this week, having beta tested the card for the past six months. One of the X1 beta testers, Akhil Bhandaru, told me that he spread his spending across multiple credit cards to keep his overall credit usage low. Although he was a well-paid engineer at Amazon, his best credit card had a monthly limit of $ 4,500 because his credit history was so short. (He graduated from college in 2020.) The X1 gave him six times more credit and better perks than any of his other entry-level cards. For the first time, he was able to use his own credit card points to pay for return flights to see his parents.

A new credit card is coming, with a touch of Silicon Valley

Source link A new credit card is coming, with a touch of Silicon Valley

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