New Startups Like Zero Are Changing The Credit Game
For years the credit card industry has been dominated by several major companies. New startups like Zero and Petal are showing signs that this will soon be changing. There is little reason to expect they will not succeed. We have seen startups like Uber completely revolutionize their industry and companies like Zero and Petal could very well be the future of the credit industry. Zero provides an innovative approach to credit – in short, they are providing all of the perks of a credit card without the debt.
Since they began fundraising the company has raised over 35 million dollars and are already live for select customers. They are expected to introduce the product more widely in the coming months. The first customers who will have access to the product will be those who have signed up for the Zero Waitlist. Currently over 200,000 customers have joined this list. The Zerocard (powered by MasterCard) is sure to make waves in the credit community in the coming weeks. Let’s take a look at what this card has to offer.
Cash Back Rewards With The Functionality of a Debit Card
The premise of the Zerocard is simple – credit card debit is ruining too many people so the card simply eliminates it. Customers who sign up for the Zerocard will also receive a Zero Checking Account. All of this is managed through the Zero App and your card will have a balance available matching the funds available in your linked account. This provides customers with real time information of the amount of money they can spend. The big difference between the Zerocard and a debit card is the rewards. Debit cards are notorious for providing no rewards and this startup is bringing customers the best of both worlds.
Earn More Rewards With Higher Level Cards
There are four tiers to the Zerocard and each step up provides higher rewards for customers. The “entry level” card is the quartz card. This card functions just as described above – it works like a debit card and is linked to your Zero Checking Account. The tier levels and cashback rewards are as follows:
- Quartz Card – 1% cash back
- Graphite Card – 1.5% cash back
- Magnesium Card – 2% cash back
- Carbon Card – 3% cash back
The tier system is one of the very innovative things about Zero. To qualify for each tier you have to meet specific requirements including referring friends to join the Zero family. There are also spending requirements that can allow consumers to jump from one tier up to a higher level.
To move from Quartz level to Graphite you will need to have $25,000 annual spending or refer 1 friend. To level up from Graphite to Magnesium you will need to spend $50,000 annually or refer 2 friends. Leveling up from Magnesium to Carbon will require spending $100,000 annually or referring 4 friends.
A “Debit-Style Experience”
Customers who use the Zerocard have the ability to opt in to a “debit-style experience”. This means that when you use your card your balances will automatically be paid in full. The payment will be sourced from the Zero Checking Account associated with your card. This is how Zero allows customers to avoid traditional debt cycles which is common for credit card users.
Another debit like aspect of the card is the ability to use it at ATMs. The Zerocard works like a debit card when you decide to withdraw funds. You are also charged not ATM fee beyond what is charged at the ATM you are using.
Zerocard Early Access
Customers are welcome to join the wait list through the Zero website. If you have received an access code with Zero you can provide your code through the main website as well. Currently, Zero has not yet announced their exact time for rollout but the card is already up and running for a small group of people so we can expect a major rollout to a wider consumer base soon. Customers who sign up now through the wait list will be the first to have access to apply.
What Drawbacks Are There For This Card?
One of the few criticisms for the Zerocard is the lack up a sign up offer. Many consumers plan their next credit card based on new cardholder sign up bonuses. The Zerocard does not currently offer a new card offer. This card is designed for consumers who are looking for a single card to be the solution for all of their spending.
One other drawback to the card is the qualifications to level up your card. The best rewards are at the top. The Carbon card offers a huge 3% cash back on all purchases. This is almost an unheard of level for a zero fee credit card. To qualify for this level you will have to refer 4 friends or spend $100,000 annually on your card. This may be challenging for some consumers but it does make a “fun” leveling up system, especially if you have friends or family who are interested in the product.
One final drawback is that Zero does not currently offer a business card option. This will not impact most individuals who are simply looking for a solid personal credit card.
Zero Fees Plus Credit Reporting
One of the major reasons consumers are shying away from credit cards is due to the high interest rates and high fees. If you use the Debit Style Experience offered by the Zero card you will never incur any interest fees. The Zero card also charges no fees for ATM use, foreign transactions and annual fees.
For consumers who are thinking that this feels like a fancy version of The Venmo Card, you would be very wrong. One of the big mistakes consumers make when shying away from credit cards for debit cards is that they are missing out on building their credit. The Zerocard may work like a debit card in many ways but your credit will be reported and making timely payments and using your card responsibly will grow your credit history. This is not the case at all with a traditional debit card – debit cards do not report your credit or help build your credit history.
Redeeming Rewards With Zero
As mentioned above, Zero relies on their banking app to offer rewards to their cardholder. This allows for low overhead cost and the ability to offer big cash back rewards. Your rewards can be redeemed through your Zero App and you will redeem them at anytime.
Final Thoughts – Who Is The Zerocard Best Suited For?
The Zerocard is a very exciting credit product and we look forward to hearing more about its reception. While the card is not currently available to the public it will likely be available to all in a very short period of time. This card will have two primary appeals. First, if you are looking for a simple credit card with no fees and no chance of carrying debt, then the entry level card is a perfect option. Customers will earn rewards on all of their purchases while using a card that works just like a debit card in terms of payment and debt.
The other route is for consumers who may be able to qualify for higher tier cards. If you are able to get some friends on board or can meet the spending requirements, the Zero Carbon Card is an incredible rewards card. Customers will earn 3% back on all purchases which beats out just about any competition.
Let us know what you think about this card in the comments below! Is this a card you would be interested in getting?