Upgrade Inc. Introduces Upgrade Card Credit Card

Last year the FinTech lender Upgrade announced it was launching a new personal line of credit option for its customers. At the time the company’s co-founder and CEO (and former Lending Club head) Renaud Laplanche declared, “We’re going to replace credit cards.” Now, 18 months later, Upgrade is actually introducing a credit card of their own — although the Upgrade Card bears some important distinctions from typical credit card products.

The Upgrade Card comes via a partnership New Jersey-based Cross River Bank and utilizes the Visa network. As a result the card is accepted wherever Visa is and will come with credit lines ranging between $500 and $50,000. What makes the card different is that purchases made are combined into installment plans with terms of 12 to 60 months, although there’s also no prepayment penalty. This allows users to pay off their balances via equal monthly payments and at a fixed rate. Speaking of interest rates, the Upgrade Card starts at a lower-than-average 6.49% APR. However the card tops out at a 29.99% APR.

Upgrade also says it plans to roll out a rewards program for the Upgrade Card later this year. Interestingly, instead of offering rewards on what users purchase (like most credit cards do), the company states that rewards will be earned as users pay down their outstanding balances. According to TechCrunch, this reward system will allow cardholders to earn 1% cash back when they make their monthly payments.

In a press release, Laplanche said of the new product, “Consumers are now able to enjoy the convenience of a credit card without running the risk of getting into a cycle of revolving debt that could literally take decades to pay off. Upgrade customers are paying almost seven times less interest on an Upgrade Card balance paid down over two years than they would by making the monthly minimum payment on a traditional credit card.” That figure Laplanche cites is detailed in a table showing that a traditional credit card user would spend approximately $14,423 in interest over the course of 28 years on a $10,000 balance (making only the minimum payment). Meanwhile Upgrade says its customers would be able to pay off that amount in just two years and spend only $2,102 in interest. Laplache also further explained the hybrid product to TechCrunch, noting, “It’s like a mortgage or a car loan with a clear payment schedule. You can budget for it and it sort of forces you to pay down the balance over a reasonable period.”

Overall the Upgrade Card sounds like an intriguing product that has the potential to change the current credit card model. Specifically the idea of tying rewards to payments instead of spending is interesting (although products such as the Citi Double Cash card do already incorporate that to some degree). While it’s unlikely that this new structure is going to replace traditional credit cards any time soon, it is another example of how FinTech lenders continue to disrupt the market.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Uber Relaunches UberPool as UberX Share

With demand for travel continuing to rise, the ridesharing app Uber has announced a feature to help both travelers and commuters to get to their destinations while saving money. After previously pausing its UberPool service option during the pandemic, Uber is now rolling out a replacement called UberX Share. At this time, the new option is available to riders in New York City, Los Angeles, Chicago, San Francisco, Phoenix, San...

Split Payment Platform Kasheesh Launches as Alternative to BNPL

In recent months, "buy now, pay later" (BNPL) platforms have exploded in popularity. What's more, with Apple jumping into the space, the practice is likely to continue growing despite some concerns in regards to how BNPL services impact consumers' personal finances. With that in mind, one FinTech has just revealed its alternative: a payment-splitting platform for online retail. Today, Kasheesh exited stealth mode to announce the launch of its unique...

Credit Karma Money Spend Adds Cashback Offers for Cardholders

Those looking to add some extra cash back into their pocket will soon have a new option. This week, the popular credit monitoring site Credit Karma announced a new feature for its Credit Karma Money customers. Now, debit cardholders will be able to earn cashback when making purchases from select retailers. According to the site, the list of eligible retailers includes national chains, such as Adidas and Shake Shack, as...