#76: Examining the Bilt 2.0 Card Launch
A lesson in building sustainable businesses
We’re mixing it up from AI today here at Relentlessly Curious. There’s been a growing controversy I’d like to put a magnifying glass on: it’s the launch of the Bilt 2.0 credit card.
We’ve touched on the credit card industry a few times here, in How Far Can Brand Take You and How Credit Card Companies Manipulate Consumer Behavior. Credit cards are a personal interest of mine, as I used to work at American Express.
Let me first catch you up on what’s been going on with Bilt, and then dive into a few predictions for Bilt’s future.
Background on Bilt
Bilt is the first major credit card program that allows card members to pay their rent or mortgage, without a transaction fee. They pulled this off by providing users with an ACH account that acts like a checking account through which payments run. Card members earn a 1x rewards point multiplier for each dollar of rent (or mortgage).
Earn rewards points on rent and put your rent check on your credit line? That’s a huge value add. For starters, I live in New York City, and rent is my largest monthly expense. Being able to earn rewards points on rent means I’m receiving multiple free flights each year. Also, paying rent with my credit card allows me to build my credit history and manage cash flow more effectively.
Additionally, Bilt created a network of hyperlocal perks that included rewards point multipliers at nearby restaurants, as well as free experiences such as workout classes. It’s a very consumer-first card program.
But nothing good lasts forever.
See, Bilt’s value proposition of no-fee rent payments with rewards points was never sustainable. It turns out, Wells Fargo has been footing most of the bill.
Bilt isn’t a bank: they’re a marketing engine disguised as a fintech company that handles card advertising and customer service. The bulge bracket bank reportedly has been losing upwards of $10 million per month (according to the WSJ), as they saw card members use Bilt for primarily their rent payment, and then pay their credit card bills in full on time. Given Wells Fargo covered much of the cost associated with offering no-fee rent payments, they didn’t have much opportunity to earn interest on revolving balances nor additional card member spend on everyday purchases.
Wells Fargo was hoping Bilt would become an acquisition channel for their mortgage business (as renters transition to homeowners), but apparently that didn’t work out. Unfortunately, Bilt attracted many people who can be categorized as “gamers”, meaning they strictly use the card for the perks, and little else. Check out this quote from Bilt CEO Ankur Jain, regarding Bilt’s rewards point requirement to transact at least five times within a month (in a recent email to all Bilt card members).
“It is probably not a surprise to any of you, but if members only purchase four bananas and earn free rent points, it doesn’t allow us to sustain such a rich value proposition for everyone.”
So, Wells Fargo cut their deal with Bilt. This triggered the need for Bilt to find a new banking partner, as well as implementing a revamped card offer that would be more enticing in the long term for a new partner.
Bilt 2.0 Launch
Fast-forward to January 2026. Bilt launches their 2.0 credit card without Wells Fargo and announces the discontinuation of all current Bilt cards. The announcement was cheery and innocuous.
That is, until you read the fine print buried deep within the credit card agreement. You know, the terms that are only accessible if you click the asterisk in the launch announcement.
I stumbled across the most confusing credit card offer I have ever read. Despite working in the credit card industry, specifically focused on the math behind credit card and loan offers, I was scratching my head. After reading over the agreement five times, I finally pieced together what was going on.
Two key points stood out.
First, rent is now auto-debited from your account upon payment. The implication: rent no longer posts to your credit balance (it is pulled from your account upon payment), thus does not contribute to building credit history. Moreover, if you want to continue earning rewards points on rent, you’ll need to pay a 3% transaction fee on your rent check. But if you spend 75% of your rent on everyday expenses, the transaction fee is covered in full under the launch terms. So, if your rent is $4,000, you’ll need to spend an additional $3,000 to avoid the transaction fee. That’s a lot of extra money.
That paragraph was confusing even to write, and that’s after I synthesized what I read and edited it.
To no one’s surprise, Bilt received major backlash online about their misleading launch announcement. The credit card industry has a poor reputation when it comes to being opaque, and Bilt further reinforced this narrative.
Since the announcement, I’ve received multiple emails from the Bilt CEO apologizing about the misleading launch and tweaking the card offering. I’ll spare you from the granular details, but the gist of the new value proposition is similar to the original launch.
To justify moving onto the Bilt 2.0 program, you really need to make Bilt your primary credit card to benefit from the higher spending requirements and conditional perks. Which makes sense, if the CEO is calling out that people are gaming the system, they likely don’t have significant share of wallet. Bilt wants a higher share of wallet and to move card members away from their existing credit cards like American Express, Chase, or Capital One.
Candidly, Bilt seems desperate to regain the trust of their community as I’ve received half a dozen emails from the CEO, and other members of the company, explaining the benefits of the new Bilt card. It’s a public relations disaster, and a good lesson in how not to communicate with your customer.
Takeaways
The “growth at all costs” strategy funded by venture capital doesn’t work if you fundamentally change the value proposition.
Venture capital tends to be a solid fit for scaling software businesses. Price the software at a loss to fuel customer acquisition, and then over time increase the price as customers have demonstrated a reliance on the product.
Think about Uber. For years after Uber’s initial launch, rides were cheap as they were subsidized by venture capital investment. The plan, “growth at all costs.” And then slowly over time, Uber increased the price of each ride. But their product as a ride-sharing platform has always stayed the same.
Bilt is attempting a similar exercise, yet with a key flaw: they’re changing the core value proposition of their product. In a lot of ways, Bilt is increasing the price of the card for the customer but not offering the same value. Bilt’s brand equity was built around their differentiated no transaction fee rent payment offering. And by ditching that offering, they’re ditching much of their brand identity.
Bilt is going from having little competition in their niche to competing with nearly every major issuer.
Bilt owned its niche in being the credit card for housing payments. With its new value proposition, Bilt now resembles a typical premium rewards card from American Express, Chase, or Capital One. A very competitive landscape.
As we discussed in How Far Can Brand Take You, I’m skeptical about Citi breaking into the premium credit card market with their Strata Elite card because they don’t have the premium branding that drives irrational card loyalty.
Bilt hasn’t achieved premium branding status, and more broadly, is taking a major brand hit due to their fundamental switch of their value proposition (not to mention questionable public relations). Bilt had their differentiator. It’s going to be a steep hill to climb from here.
Bilt needs an experienced operator to navigate out of their tricky position. Thankfully, they have it.
Former American Express CEO Ken Chenault sits on Bilt’s board given his position as chairman of General Catalyst, an anchor investor in Bilt.
From my time at American Express, it seemed that Chenault’s legacy centered around two main things. First and foremost, he turned American Express into a premium lifestyle brand. And secondly, he was an excellent leader during crises, navigating Amex through the troughs of 9/11 and the Great Recession. Both instances where consumer spending fell drastically.
Chenault has handled difficult business environments in the payments industry before. Although he now has his hand in a peculiar problem where the core value proposition is changing, I would give him a reasonable likelihood of helping right the ship.