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The Wall Street Journal is reporting that Wells Fargo is in the process of renegotiating its deal with Bilt as the credit card partnership is costing the bank around $10 million monthly. This is bad for Wells Fargo, but cardholders have been reaping the benefits.
In 2022, Wells Fargo wanted to expands its credit card business. Bilt was looking for a bank to underwrite its product and the two paired to launch the Bilt Mastercard®. Wells Fargo felt that the Bilt product would attract an audience of younger consumers who were currently renting their apartments. They would build loyalty and then eventually seek mortgages with the bank when they were ready to buy their first homes.
According to the article, Wells Fargo miscalculated on key revenue drivers with the partnership. It has recently attempted to renegotiate its contract (which runs until 2029) and has already informed Bilt that it will not be renewing the agreement unless something changes.
Here’s how the reported economics of the deal works:
- Wells Fargo pays Bilt a 0.8% fee on all rent payments (even though its not collecting any interchange fees from landlords). Wells Fargo pays Bilt for the points it issues to renters.
- Wells Fargo also pays Bilt $200 for each new account opened.
- Wells Fargo had projected that 65% of purchase volume on the Bilt Mastercard® would be non-rent expenses, but this has not proven to be true.
- Wells Fargo further projected that 50-75% of purchases would not be paid in full monthly (it’s actually more like 15% to 25% that generates interest charges).
The biggest impact on Wells Fargo’s future strategy is that the bank has stopped pursuing co-branded credit card partners and is looking to launch its own products.
The Bilt Mastercard® has been a great addition to my wallet. It has no annual fee and I love that I earn points each month for paying the rent on my Florida place. There have also been some incredibly lucrative transfer offers. I was thrilled to take advantage of the Air France-KLM Flying Blue one last year and earned a ton of points to cover a trip to Europe in Business Class. Rent Day is also a great way to rack up bonus points as you earn 6x points on dining and 2x points for travel and other charges on the 1st of every month.
Anthony’s Take: I can’t say that I’m surprised that Wells Fargo is losing money with the Bilt Mastercard®. It’s incredibly generous to consumers and offers a huge list of transfer partners, which makes it a dream for travelers looking to cash in points for trips.
(Image Credits: Bilt.)
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Advertiser & Editorial Disclosure: The Bulkhead Seat earns an affiliate commission for anyone approved through the links above This compensation may impact how and where links appear on this site. We work to provide the best publicly available offers to our readers. We frequently update them, but this site does not include all available offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed, or approved by any of these entities.
