re: Credit Card Rewards and Points Discussion

Yes call them and offer to move existing credit with Citi around.

Most places keep applications open 30 days. You can call and reconsider when your report comes in

Been looking forward to your blog for awhile now. Definitely let us know when you get that up and running. I haven't been traveling as much, but would be happy to contribute when I do.

On another note, curious to get you all's opinion on a tech company I'm about to take full-time. I am in the process of raising seed funding right now before beta testing our MVP with select users. Hope to be live by Jan 1, 2017.

Essentially what we are creating is a safety-account that sits between your credit card account and primary checking account. When a buyer swipes their CC, we recognize that pending amount in real time and automatically deduct (you can set max limits) that from your checking. Users now settle CC debt on an individual transaction basis, not a once-a-month basis. Essentially we act as a hedge against irresponsible spending and paying interest so that those who are primarily debit card users can still reap the benefits of using a CC and begin to build credit history.

I know most on here settle debts once when your balance is due and some millennials do that as well, but most want the familiarity they have be come accustomed to with a debit card. Would be curious to hear thoughts, objections, or opinions.

Good question and very realistic scenario. We are essentially a safety savings account sitting in the middle. The individual is always responsible for their transactions/expenses, not us. We simply collect and hold your money now to pay later. When your balance is due, we use whatever is in your account to cover that amount. If it's 100%, great. If it's 75%, that OK to. We will then send a month-end report with balances due, spend data/tracking/analysis, and rewards summary.

Also, to prevent that scenario, we are going to give people 2 options that prevent automatic deductions in cases where funds may not be adequate. 1) Max Transaction Limit: say you set yours at $75. Any expense over $75 will not be auto-deducted. Instead, we will send a push notification letting you determine if you do want to auto-deduct or not. 2) Minimum Account Balance Limit: If you never want to have your primary checking account be below $100, you can set that and once you are there, we will no longer auto-deduct. You can continue swipping your CC, we just will no longer pull from your primary spend account. As a general rule, we are evaluating a number (~$30) to set as the standard so funds quit being auto-deducted when your checking account hits this balance.

Lastly, our target market is millennials/young professionals who are financially responsible. Individuals who right now are using their debit card for everyday expenses: gas, groceries, booze after work, restaurants, clothes, etc. If you are using your debit card as a primary payment method and don't own a CC, you can only spend what you have available. While that's who we are targeting and who we think we will see success with, we certainly understand scenarios like the one you mentioned are very real.

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How much are your services? A percentage of the amount that you intercept?
I can see your service being useful, but if I'm earning $20 rewards a month by using a Discover card (just using round numbers and example) instead of a debit card, then I wouldn't be able to pay you much for your service.

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Really appreciate your questions guys. This is exactly what I was looking for. I understand my why so deeply, that my vision of what I think it is or why it's relevant is often skewed.

The app will be free to use. We capitalize monetarily on the float time between when we collect your money and when we actually use it to pay. Any interest earned on users balances is revenue for us. That's a very small # in individual scenarios, but that # gets exponentially larger if we can penetrate even a small percentage of the total market. This is how similar financial tech companies like Digit, PayPal, and Venmo operate.

We have also kicked around the idea of $.05 roundups for additional revenue. For example, if you spend $9.72, we will always round up to the nearest $.05 making it $9.75. We keep the $.03 as a type of convenience fee. That adds a recurring revenue stream while having a very small financial impact on users. If you had 50 transactions a month, which is on the absolute high end, and we took the max roundup possible at $.04, you are only paying $2/month in those fees.

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cfa626

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If I remember right from previous posts, you are around my age. Would be curious to know you and your friends payment habits are? This was created due to my frustration with the credit card payment process. Obviously they don't want you paying off immediately, but as millennials, that's all we have ever known with a debit card. Card gets swiped, funds get deducted. Not the same with a credit card. I got sick and tired of being able to see my pending balance and not being able to pay it. Also hated seeing the number at the end of the month when I went to pay my statement. If you are someone who uses a debit card primarily right now, would you be more inclined to use a credit card if it essentially functioned the same way as a debit card?

Also, don't want to hijack this thread as it's extremely valuable to a lot of people, so someone let me know if this is a distraction.

Hyatt

Sweet thanks for the info. Sounds like Hyatt is the way to go for points...

My boss stays at the Four Seasons Beverly Wilshire which looks really nice but he said he doesn't get points from there.

The other options I have seem to be Mariott hotels but I haven't had a chance to look on our company's travel site yet to see if there are any Hyatts available.

Unfortunately I have to book with a corporate card, so I can't use my Citi Prestige. Plus I have to book through our travel agent versus the Citi Concierge group. But that would be awesome if I could get that fourth night free credit weekly.

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The app will be free to use. We capitalize monetarily on the float time between when we collect your money and when we actually use it to pay. Any interest earned on users balances is revenue for us. That's a very small # in individual scenarios, but that # gets exponentially larger if we can penetrate even a small percentage of the total market. This is how similar financial tech companies like Digit, PayPal, and Venmo operate.

We have also kicked around the idea of $.05 roundups for additional revenue. For example, if you spend $9.72, we will always round up to the nearest $.05 making it $9.75. We keep the $.03 as a type of convenience fee. That adds a recurring revenue stream while having a very small financial impact on users. If you had 50 transactions a month, which is on the absolute high end, and we took the max roundup possible at $.04, you are only paying $2/month in those fees.

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There is some app out there that rounds up to the nearest dollar, and then it puts that money in an account for you. I don't know what it is called but I've read about it before. Might want to see what type of structure the app has because it could offer some competition. Also, the most revenue for you might come from advertising like it has for Facebook. That may be just as profitable as the interest. If there is a way you can tap into advertising on your app, I would do that.

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Would be curious to know you and your friends payment habits are?

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Honestly, I know people all over the spectrum. Some try to stay on budget to save up for their next house or pay off student loans, and they either keep close track of their credit card balances or just use cash. Dave Ramsey's envelope system has caught on with a lot of people.
Other friends, and myself, use credit cards a lot more for the rewards. But most of us do end up spending more than we plan on. I pay mine off every month but I am sometimes shocked at how much I spent in the previous month. Actually, starting this month, I started keeping close track of every charge and trying to make myself more conscious of how much I'm spending.

Your app sounds like it is a good tool to help with budgeting without having to think about it. With some strategic marketing, you could point out the benefits to several groups of people who may be in different stages of life (trying to save for a goal, trying to rein in spending, trying to earn rewards, etc.,)
Best of luck to you

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Any suggestions on which hotel is best to accumulate points?

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I've heard good things about Hyatt and the card benefits so that could be a great,option in L.A. but they don't have the variety of the other majors. Outside of Four Seasons and Hyatt, Starwood has the sweetest hotels in L.A. and most of the world imo.

Get the SPG Amex and earn up to 5x points at SPG properties. The points are some of the most flexible out there and for sure most valuable.