A few days ago, an article in WSJ made quite a splash in the miles and points world. It’s behind a paywall, but here are the highlights:
1) Wells Fargo pays BILT 0.8% on all rent transactions, even though the bank makes ZERO on them
2) BILT makes $200 on each card approval
3) Wells Fargo is losing $10 million PER MONTH on this partnership
4) The contract is supposed to be renegotiated in 2029, though Wells Fargo is currently in discussions to change some key terms
There is more, but that’s the gist of it. This article has been discussed by bloggers ad nauseam, so I won’t make a super long commentary. But like others, I’ve thought that BILT card seems too good to be true. I was never super interested in it due to lack of signup bonus. However, it’s tough to argue with earning points on rent at no cost.
It’s a unique feature of the card and to the best of my knowledge, no other company offers it. Sure, you can pay rent via certain providers, but it usually will cost you 3% in fees. On top of it, the card offers highly valuable transfer partners like Alaska Mileage Plan and Hyatt, and has no annual fee. How can they afford to offer this kind of value proposition!? Well, now we know.
First of all, wow. The CEO of BILT must be some sort of wizard of salesmanship, and I don’t mean any sarcasm. How did they convince Wells Fargo to this stinker of a deal is a real mystery indeed. I’m sure BILT program was created with the best of intentions, but I will be very surprised if it survives past 2029. Even that may be too optimistic.
There is no way any other bank will ever touch it after this article. The same goes for potential investors. The cat is out of the bag. Of course, I wish things were different. BILT has created an innovative product, an AMEX SPG card of sorts (RIP), except better and without an annual fee. But there is no such thing as free lunch.
Don’t shed tears for Wells Fargo, they are still making a ton of profit on their other cards. Of course, no bank is willing to bleed $10 million per month indefinitely. Oh, and don’t shed tears for BILT. The CEO is probably a billionaire due to this partnership, and most employees make handsome salaries. For now.
In retrospect, the consumers they were after didn’t really show up, which doesn’t surprise me. People who collect miles and points tend to be more savvy than your average Joe. Those who read miles and points blogs (which is how most folks have learned about the card in the first place) rarely carry a balance each month. Many rent by choice, to preserve flexibility. I’m sure they maximize extra points on Rent Day and buy five bananas at a grocery store (one at a time). This is so they can satisfy the “5 purchases per month” requirement in order to earn points on rent.
What now?
While I don’t think anything will change in a near term, there are a couple of things you may want to consider:
1) If you see a super generous transfer bonus, consider taking advantage of it
I don’t know if we will ever see 200% bonus on transfers again, but if we do, go for it if it’s a currency you normally find useful. Air France and Virgin Atlantic would be my top picks, but yours may be different.
2) Consider transferring to Hyatt and Alaska programs speculatively even without any bonus
I honestly doubt we will ever see one anyway, and those are probably the most valuable partnerships BILT has at the moment. Conversely, they are the most likely ones to cut ties without notice, especially now that the jig is up.
3) If you rent, consider signing up for BILT credit card while you still can
Once again, it’s free points, so why not? Nancy has written about applying for this card in February and then getting a 5X offer valid on all purchases for the first 5 days after getting the card. This appears to be a targeted offer, and nobody has figured out the rhyme or reason why some folks get this 5X offer and some folks do not. The maximum points you can earn on this offer is 50,000.
I almost applied for BILT card with the idea of rolling the dice on 5X offer when our drain field collapsed a few months ago, but changed my mind. It worked out for the best, as I used Chase “Pay Over Time” deal instead.
If you’re interested in applying for the Bilt Mastercard and want to support our blog, you can apply through my referral link here or Nancy’s link here.
We will earn 2,500 points for each approval.
Author: Leana
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.
@Leana
“At any rate, WF isn’t making money on me, never has.”
Now that’s the spirit! 🙂
@projectx Yes, definitely heard about it. My understanding is that those responsible were fired and that WF paid huge fines for letting it happen in the first place. I certainly have no illusions about this bank (or most banks for that matter), but I would feel more comfortable with WF than other institutions at this point in time. Only because they are being closely watched, not due to newly found sense of morality. At any rate, WF isn’t making money on me, never has.
@Leana have you not heard about WF’s fake account scandal? I guarantee you’ll have a lot of ill will towards these criminals after reading up on it.
@Gentleman Jack Darby Thanks for your comment. If I knew of a way to read this article for free, I would definitely point it out. Regardless, this topic has been discussed in detail on quite a few sites, and if a reader is interested, they can find more information by using Google. I have simply pointed out the details I personally found fascinating. I’m sorry, I don’t think the response from CEO (which I’ve read) warrants a mention. He is simply trying to protect his company.
It’s true that WF had a totally different idea on how this partnership would work out. Of course they did, otherwise they wouldn’t agree to this deal in the first place. However, they clearly haven’t done enough research. Why did other major banks pass on this deal, yet WF somehow thought they have found a diamond in the rough?
Either way, I have no ill will towards WF or Bilt. I hope they can make the economics of this deal work out. I just think chances of that are slim. But hey, if I’m wrong, I will be the first to admit it and write a post on it. That’s a promise.
It would have been much more helpful to your readers, as well as fair to the WSJ, Wells Fargo, and to Bilt, if you would have explained how they might read the article for themselves and failing that, at least included the assumptions that WF made regarding targets such as cardholder carryover balances and cardholder other category spend that would have made the Bilt card a winner for WF.
Pretty disingenuous to cherry-pick a few things and to paint an incomplete picture for your readers.
@projectx LOL I’ve seen more that one person express this sentiment. WF has been good to us, so I have no ill will towards them. It does make me question their hiring practices. How could anyone with a business degree think it’s a good deal for WF?! Unreal.
Of all the the banks that this could happen to, the fact that it’s Wells Fargo warms my heart. Karma.