The New Bilt Ecosystem and Cards

Several years ago, I wrote an article about the rent payment startup, Bilt. Their entire premise was to let you earn points on rent, which for many people, is a major expense that has historically been paid by check or ACH and thus has been ineligible to earn rewards points. In creating the new payment ecosystem, which I assume is where most of their revenue comes from, they also launched a credit card that offered 1x point/$ on rent, which was a great deal for a no annual fee card.

Since no fee is being charged when you pay rent, but the card still has to use a payment network (MasterCard in this case), that meant that the bank (Wells Fargo) issuing the card just had to absorb the cost of the interchange fee for that purpose (pushing 3%) and recoup that cost elsewhere. There are three main places that a credit card company can make money: (1) the interchange fee on other purchases, (2) annual fees, or (3) interest and/or late fees.

This card is a no annual fee card, so (2) isn’t relevant. Since a large portion of the spend on this card was rent, which is a large non-optional payment that if you get behind on, you are in a huge world of trouble, the amount of interest/late fees being charged was, as one may expect, lower than for a similar card. That means that a substantial portion of non-rent spend needs to be put on the card to be able to justify losing out on the interchange fee revenue. They attempted to encourage spend on the card by requiring five (5) transactions on the card each month, but also as one may expect, it was simply too easy to game the system.

So that means that the one path to long(er) term stability/profitability of the card ecosystem comes down to getting people to put enough spend on the card to overcome the lost revenue from paying the transaction fee on rent. And that’s what they’ve done with the new Bilt 2.0 as they call it. This first article is mostly just going to be me trying to explain how Bilt 2.0 works in the context of the new no annual fee card (which isn’t interesting enough for a full article anyway).

This blog is for entertainment purposes only and is not financial advice.  I provide the information here just to give readers a vague idea if the rewards offered by the card might make sense for them to consider the card.  The information on this page has been collected independently, and all information should be confirmed with the card company before applying.

How to earn Bilt points

The new Bilt 2.0 ecosystem cards now earn two types of reward currency: Bilt points and Bilt Cash. Bilt points remain unchanged. Bilt Cash is new. Bilt Cash is bad name in my opinion because it’s just a second type of points-based reward currency. On all Bilt cards, you earn 4% Bilt Cash per dollar spent. I would argue that in some ways having two rewards currencies is not dissimilar to how some freemium mobile games have two currencies (usually coins and gems).

What can you do with Bilt Cash? There are two options– Option 1: you can trade it in for Bilt points or Option 2 you can redeem it for discounts or bonus points on purchases. Option 2 is nominally better, but it requires a lot of couponing that I’m not going to go into. Option 1 is straightforward, where you spend 3 cents of Bilt Cash to buy 1 Bilt point. The maximum amount of Bilt points you can buy using Bilt Cash is the amount of money charged as rent (i.e. $2 500 rent = max 2 500 Bilt points).

After the initial announcement, there was a lot of backlash around the complexity of Bilt Cash and the lack of information around what the other uses (Option 2) would be, so Bilt hastily launched an alternative points collection option, which I’ll call the “pure points option”. This option is for those who don’t want to deal with Bilt Cash (which is fair) and just simply buckets the number of points you earn on rent in a given month to the amount you spend on the card:

Rent	Card Spend	“Bonus” Bilt Points
$2 500	$625	1 250
$2 500	$1 250	1 875
$2 500	$1 875	2 500
$2 500	$2 500	3 125

The rate is largely the same as with Bilt Cash but it cuts out the middle-part.

How to use Bilt points (unchanged!)

Bilt lets you redeem your points as a statement credit but only gives you a value of 0.55 ¢/point, which is not great.  You can also redeem the points for travel at a rate of 1 ¢/point, which is better.  The best use of these points, however, in my opinion is to transfer them to partners.  And Bilt has some decent transfer partners.  Specifically, Bilt partners with United Airlines (like Chase), British Airways (like every card honestly), Atmos Rewards (Alaska/Hawaiian), and World of Hyatt (which has been considered to be one of the most valuable reward currencies, but that may be changing).  In my case, I will probably transfer them to American Airlines on demand to top up my balance.  I could also transfer them to British Airways, but I already can do that from Chase and from American Express.

Examples of using the card

The base card earns 1x on everything, so the standard chart is not super interesting. It really comes down to a simple framework in my opinion: if you pay for rent using your Bilt Card, you can earn an additional 0.5 – 1.33x points/$ on your purchases if you’re willing to play the second currency game. For the $0 annual fee card, this turns a 3/2/1 structure into a 1 – 2.33 points/$ across all categories structure.

Is the new Bilt 2.0 ecosystem right for you?

At this point, it’s unclear. The oversized value is gone, but there are still opportunities for it to make sense, and the $0 annual fee card is pretty low risk because you’ll still pay rent with no transaction fee, and you have the potential opportunity to earn bonus points beyond the base card earn. I could see some merit if you spent up to 75% of your rent value on a card so you could maximize your Bilt Cash -> Bilt points earned conversion because you’d earn 2.33 points/$ (vs a lot of cards cap at 2x points/$ or 2% cashback), but it requires a lot more tracking. My thoughts on Bilt 2.0 are likely to continue to evolve for a while, but in the immediate term, I opted not to transition to Bilt 2.0.