Wells Fargo may have underestimated just how savvy millennial credit-card holders can be (2024)

Customers could also receive points for travel and dining. Those points could then be used for purchases with any of Bilt's partners, such as Alaska Airlines, Virgin Atlantic, Hyatt, and Soul Cycle.

According to The Wall Street Journal, Bilt opened more than 1 million accounts within the first 18 months.

But the return for the bank has yet to materialize.

A 'generation of young, affluent new customers'

Bilt's demographic is decidedly different from the average American — who has a median salary of just under $60,000, with 49% of them holding onto a credit-card balance month to month.

But a report on Bilt prepared by the investment-banking firm Financial Technology Partners said the company was reaching out to a "generation of young, affluent new customers."

In a February interview with The Wise Marketer, Dave Canty, Bilt's head of loyalty and partnerships, said the company's core demographic is between 24 and 34, with a median age of about 29.

"The average income is about $147,000, so these are high-achieving young professionals," he said in the interview.

Ankur Jain, Bilt's founder and CEO, said on X that his company was attracting "highly valuable customers" for Wells Fargo at low costs. He said the average customer is 31 years old and has a 760 FICO score.

Kevin and Amanda Smidt, who live in Miami, told Business Insider they heard about the program on a financial podcast and have been Bilt cardmembers for about a year.

"I've never heard of it, and I was like, 'Wow, that's so smart,' because — especially if you live in a major city like New York or Miami — you're spending a lot of money on rent," Amanda Smidt, a 32-year-old business owner and registered nurse anesthetist, said. "I was like, 'This makes so much sense because I have this huge payment every month, but now I'll get points.'"

The two described themselves as financially responsible, telling BI they never carry a balance on their multiple personal credit cards, including Bilt.

"I heard about it on a financial podcast about investing. I'm a responsible person who invests, you know what I mean?" Amanda said.

Kevin Smidt, who is 33 and working on a fellowship as an orthopedic surgeon, told BI they've racked up 56,000 points in about six months and transferred them through one of Bilt's programs to turn their earnings into 126,000 points with Virgin Atlantic. Kevin said they used the rewards to pay for three flights, two in business class and one on Virgin's new plane.

Kevin also said the card could be beneficial for general use, given the rewards a customer can earn from travel and dining. But for the Smidts, most of the non-rent purchases they've made with Bilt were to meet the minimum five-transaction requirement.

"A lot of the times, that's like a latte," Amanda said. "I just do small purchases to be able to get the points from the rent."

Kevin said he hopes Wells Fargo doesn't get rid of Bilt, but Amanda chimed in: "Well, actually, we just bought a house."

"Oh, yeah," Kevin said, "so we won't be able to use it anymore."

A costly program

The Journal reported on Sunday that Wells Fargo was losing up to $10 million a month to sustain the Bilt program, citing anonymous current and former employees.

Part of the problem is that Wells Fargo may have miscalculated how Bilt customers would use the card.

The Journal reported that only 15% to 25% of the dollars people spent on the card were carried over month to month, which is crucial for Wells Fargo to generate interest-fee revenue. The bank projected that the carryover would be between half and three-quarters of the dollars spent.

Wells Fargo also anticipated that 65% of the credit-card-purchase volume would be for expenses other than rent. Instead, the Journal said, most purchases are for rent payments despite Bilt's requirement of five transactions per statement to score points.

Wells Fargo and Bilt declined to comment on the reported numbers. A Bilt spokesperson told Business Insider that Wells Fargo does not make the numbers publicly available.

In an email, a Wells Fargo spokesperson told Business Insider that cobranded credit cards are "one modest piece of the company's overall credit card business strategy, and the BILT credit card is one component of that."

"As with all new card launches, it takes multiple years for the initial launch to pay off and while we are in the early stages of our partnership, we look forward to continuing to work together to deliver a great value for our customers and make sure it's a win for both BILT and Wells Fargo," the spokesperson said.

The Journal reported that the losses have pushed Wells Fargo to rethink its partnership with Bilt, and the bank may not renew its contract, which is set to expire in 2029.

The Wells Fargo spokesperson said that "there has been no conversation among decision-makers to exit the BILT agreement. To suggest otherwise is false."

A Bilt spokesperson said the Journal's story is an "inaccurate representation of our strategic partnership with Wells Fargo."

On X, Jain did not address the reported losses but repeated Wells Fargo's statement denying the bank's plan to end the partnership once the contract expires.