Bilt 2.0 rewards you most when you spend less

OK, I promise that this is my last Bilt post for some time – or at least until it makes its next major program change, which will probably be in a couple of days.

Bilt has added two new credit cards, transferred the whole portfolio from Wells Fargo to Cardless, and unveiled a revamped rewards program with two different rewards currencies, two different ways to earn points on housing payments, and a panoply of coupons that made Amex, the issuer that used to hold the “Coupon King” title, need to take a nap.

In many ways, Bilt 2.0 feels like a nationwide beta trial, where we’re seeing the program thought out and implemented in real time, with a focus group of hundreds of thousands (millions?) of people. Because of that, it’s hard to count on anything we know now to be exactly the same next month, let alone next year.

But I wanted to concentrate on one feature of Bilt 2.0 as it currently stands: for people with housing payments, it’s most rewarding when you spend less on the Bilt credit cards.

How to earn Bilt rewards on housing payments

Option 1: Bilt Cash

When Bilt 2.0 first rolled out, there was only one way to earn Bilt Points on housing payments: Bilt Cash. All Bilt members earn $50 in Bilt Cash for every 25,000 points earned from any source, but the primary way to acquire it is via credit card spend. Each new Bilt credit card earns 4% in Bilt Cash back on most credit card spend, meaning that $100 in spend would get you four “Bilt Bucks.”

If you pay rent through the Bilt Portal (via ACH), you can then redeem 3 Bilt Bucks per $1 of housing payment to earn 1 Bilt Point. Since each dollar of credit card spend earns 4 Bilt Bucks, that effectively means that, if you’re using Bilt Cash to unlock what we’d call “housing rewards,” you’re essentially earning 1.33 Bilt Points per dollar of eligible credit card spend (note that there are a some decimals after that 1.33 that will create a few extra points, but it’s insignifcant, so I’m going to use the 1.33x number for the sake of convenience).

If you earn more Bilt Cash than you can redeem for housing rewards, you can spend the excess at the Grande Coupon Emporium (or save it until 12/31, when all but $100 will expire).

Option 2: “Simplified” Tiers

About 48 hours after Bilt 2.0 was released, it announced a second way to unlock points on housing, in response to confusion about Bilt Cash. This is a “simplified” system that doles out housing rewards based on the proportion of your monthly housing payment amount that you spend on Bilt credit cards.

It was announced as “earn up to 1.25x” and operates according to the following tiers:

• Spend 25% of your housing payment in a month, earn 50% in points. For example, if you have a $1,000 housing payment and spend $250 on your Bilt credit card, you’ll earn 500 points in addition to whatever you received directly from the card spend.
• Spend 50% of your housing payment in a month, earn 75% in points. If you have a $1,000 housing payment and spend $500 on your Bilt credit card, you’d earn 750 points.
• Spend 75% of your housing payment in a month, earn 100% in points, or 1,000 points on a $1,000 housing payment.
• Spend 100% of your housing payment in a month, earn 125% in points, or 1,250 points on a $1,000 housing payment.

At first blush, it seems like you would want to go for the highest tier: 1.25x. However, Bilt’s explanation of the system doesn’t quite tell the whole story. Normally, when designing something like this, a company would give you a bonus for reaching a certain level of spending, and I would have thought that’s what Bilt would have done. So, for example:

• Spend 25%, earn 25%
• Spend 50%, earn 50%
• Spend 75%, earn 75%
• Spend 100%, get a 25% bonus, for a total fo 125%.

Not only is that easy to understand, but it also incentivizes people to allocate 100% of the amount of their monthly housing payment to credit card spending. However, Bilt’s done something very odd here…they give you the same 25% bonus no matter which tier you hit.

If we wanted to describe this in terms of points earned per dollar spent, it would be:

Earn 2x Bilt points per dollar when you spend 25% of your housing payment, then 1x per dollar on all spend from 25%-100%, then nothing thereafter.

The sweet spot in points per dollar isn’t 100% of your housing payment, but rather 25%. This creates some strange incentives.

How to “maximize” Bilt earnings on housing payments

Points Accelerators

When Bilt released its lengthy menu of Bilt Cash coupon redemptions last week, an interesting one was a “Points Accelerator.” You can buy up to 5 accelerators per year for $200 each in Bilt Cash. Each one allows you to earn an extra 1 point per dollar on up to $5k in credit card spend, the end of the calendar year, or until you switch your earning method to option 2.

That last point is worth emphasizing. You can only use Points Accelerators when your earning method is set to “Bilt Cash.” If your earnings method is set to option 2, you will not be able to redeem for an accelerator, regardless of whether or not you have enough Bilt Cash for it. Conversely, if you’ve already activated a points accelerator and switch your earning method to option 2, you will immediately lose the accelerator that you purchased.

This is something that a lot of people didn’t realize – including me, until last week, when a reader pointed it out in the comments of my post on Bilt Cash. It’s an odd and non-intuitive restriction, but it is what it is.

Because you can only use the accelerator when you’re earning Bilt Cash, it will never be worth earning one if your spending is below or equal to your housing payment.

That’s because it would take $5,000 in spending to earn the $200 in Bilt Cash to apply toward the award, from which you’d effectively get 5,000 bonus points if you maxed it out. If you used the Bilt Cash earned from that $5k spend towards unlocking housing rewards, you’d earn ~6,650 points. So, accelerators should really only come into play if you earn more Bilt Cash than you can redeem on credit card spending, or if you don’t have a housing payment to begin with.

That is, unless you already have some to begin with.

Using the Bilt Palladium card

Card Offer and Details

Bilt Palladium Card ⓘ $630 1st Yr Value Estimate$300 Bilt Cash valued at $150, $200 Bilt Cash valued at $100, $400 Bilt Travel hotel credit ($200 per six months) valued at $100 Click to learn about first year value estimates 50K points + $300 Bilt Cash ⓘAffiliateThis is an affiliate offer. Frequent Miler may earn a commission if you are approved for this offer 50K Bilt points + Gold elite status after $4K non-housing spend in the first 3 months, plus $300 Bilt Cash when you apply & are approved $495 Annual Fee Learn more Earning rate: 2X points + 4% Bilt Cash on everyday purchases if you choose Bilt Cash rather than housing-only rewards ✦ 1X points on rent & mortgage payments (subject to a 3% fee that can be offset with Bilt Cash) Base: 2X (3.1%) Card Info: Mastercard World Legend issued by Column NA. This card has no foreign currency conversion fees. Noteworthy perks: Transfer points to airline and hotel partners ✦ $200 Bilt Cash annually ✦ Up to $400 in Bilt Travel hotel credits ($200 per six months, two-night stay required) ✦ Earn miles on rent or mortgage payments ✦ Priority Pass (lounges only)

Essentially, there are two earning “maximums” when involving housing rewards: 2.33 Bilt points per dollar of credit card spend when using Bilt Cash + a Points Accelerator, or 2x when spending 25% of your housing payment and using option 2.

I’ll use myself as an example, first with the Bilt Palladium card, which earns 2x everywhere, and then with the Obsidian card, which earns 3x on groceries.

My wife’s and my mortgage payment is right at $3,000 per month. If I were to apply for the Palladium card, I’d get $500 in Bilt Cash upon approval ($200 from the annual card bonus + $300 from the welcome offer), then have to spend $4,000 within the first three months to earn the 50,000-point welcome offer. Here’s what I’d do:

• Month 1-6: Set my earning method to buy 2 Points Accelerators with $400 in Bilt Cash, then spend ~$1,667 in each of the first six months to maximize the accelerator and earn the welcome offer. After six months, I’d earn 20,000 points from the credit card’s 2x, 13,300 points from housing rewards, and 10,000 from the accelerators, for a total of 43,300 points after $10k spend (not counting the 50k from the welcome offer).
• Month 6-12: Set my earning method to option 2, and spend $750/month. I’d earn a total of 9,000 points from the credit card’s 2x and 9,000 from the housing rewards, for a total of 18,000 points on $4,500 in spend.
• After 1 year, I’d have 61,300 points from spending $14,500 for a total return of 4.23x everywhere.

In year two, I’d earn another $200 Bilt Cash on my anniversary, so it would be similar, just with one less Point Accelerator, since I don’t have the extra $300 from the welcome bonus:

• Months 1-3: Buy a Points Accelerator with $200 in Bilt Cash, then spend $1,667 in each of the first three months to maximize the accelerator and earn the welcome offer. After two months, I’d earn 10,000 points from the credit card’s 2x, ~6,650 points from housing rewards, and 5,000 from the accelerator, for a total of ~21,650 points after $5k spend.
• Month 4-12: Set my earning method to option 2, and spend $750/month. I’d earn 12,000 points from the credit card’s 2x and 12,000 points from the housing rewards, for a total of 24,000 points on $6,000 in spend.
• After 1 year, I’d have ~45,650 points from spending $11,000 for a total return of 4.15x everywhere.

What I like about this option is that I’m earning excellent returns for what averages out to ~$1,000/month in spending, leaving plenty of space to do even better with new credit card welcome offers. I’d also have $100 in Bilt Cash floating around that I could use for a transfer bonus or another type of redemption, and it would stay in my account even if I didn’t use it by December 31st.

What I don’t like is that it limits my total earnings, as the per-dollar return falls drastically once I reach 25% of my rent.

My sister lives near me and pays ~ $2,000 per month in rent. It would be fairly easy to process that through my account and have her pay me, which is now firmly kosher from Bilt’s perspective. That would raise my monthly “housing” payments to ~$5,000. If I did that, my first year with the Palladium would look slightly different:

• Month 1-4: Buy two Points Accelerators with $400 in Bilt Cash, then spend $2,500 to maximize the accelerator and earn the welcome offer. I’d earn 20,000 points from the credit card’s 2x, ~13,300 points from housing rewards, and 10,000 from the accelerators, for a total of ~43,300 points after $10k spend (not counting the 50k from the welcome offer).
• Month 5-12: Set my earning method to option 2, and spend $1,250/month. I’d earn a total of 20,000 points from the credit card’s 2x, and 20,000 from the housing rewards, for a total of 40,000 points on $10,000 in spend.
• After 1 year, I’d have ~83,300 points, spending $20,000 for a total return of ~4.17x everywhere.

Note that, even though I’m spending more money, my yearly earning rate dips because I’m spending a higher proportion at 4x vs 4.33x – but it will never dip below 4x so long as I don’t go above 25% of my housing payment.

Using the Bilt Obsidian card

Card Offer and Details

Bilt Obsidian Card ⓘ $30 1st Yr Value Estimate$200 Bilt Cash valued at $100, $100 Bilt Travel hotel credit ($50 per six months) valued at $25 Click to learn about first year value estimates $200 Bilt Cash ⓘAffiliateThis is an affiliate offer. Frequent Miler may earn a commission if you are approved for this offer $200 Bilt Cash when you apply & are approved $95 Annual Fee Learn more Earning rate: 4% Bilt Cash on everyday purchases if you choose Bilt Cash rather than housing-only rewards + 3X points on dining or grocery (Limit $25K per year for grocery) ✦ 2X points on travel ✦ 1X points on everyday purchases ✦ 1X points on rent & mortgage payments (subject to a 3% fee that can be offset with Bilt Cash) Base: 1X (1.55%) Travel: 2X (3.1%) Flights: 2X (3.1%) Hotels: 2X (3.1%) Grocery: 3X (4.65%) Dine: 3X (4.65%) Card Info: Mastercard World Elite issued by Column NA. This card has no foreign currency conversion fees. Noteworthy perks: Transfer points to airline and hotel partners ✦ 2x $50 Bilt Travel portal hotel credit every six months (minimum two night stay) ✦ Earn miles on rent or mortgage payments

Now, let’s look at the Bilt Obsidian card, which earns 3x on up to $25k in groceries per year. Currently, you’ll receive $200 in Bilt Cash upon approval, allowing me to do almost the same thing as with the Palladium card, while focusing on grocery-store spending as much as possible.

This time, there’s no reason to front-load the spending, since there’s no welcome offer. This is what I would do if I were only paying my own $3,000 mortgage:

• • Month 1-5: Set my earning method to Bilt Cash, buy a points accelerator with $200, then spend $1,000 on groceries each month to maximize the accelerator. I’d end up with 15,000 points from the credit card’s 3x, ~6,650 points from housing rewards, and 5,000 from the accelerator, for a total of ~26,650 points after $5k spend.
  • Month 6-12: Set my earning method to option 2, and spend $750/month. I’d earn a total of 15,750 points from the credit card’s 3x, and 10,500 from the housing rewards, for a total of 26,250 points on $5,250 in spend.
  • After 1 year, I’d have ~52,900 points, spending $10,250, for a total return of 5.16x on groceries.

In year two, I wouldn’t have an accelerator, so I could just keep my earning method set to option 2 and spend $750/month on groceries while earning 5x. Alternatively, I could change my earning method to Bilt Cash at any time and earn 4.33x on groceries up to $3,000 per month (until I hit the $25k max).

Final Thoughts

Many of those who’ve waded through this gargantuan pile of minutia are undoubtedly thinking, “What the heck, I want to earn more points than 25% of my monthly housing payment will give me, this is nuts!”

Fair point. There are heavy spenders out there (and folks with smaller housing payments) who want to go to town on the Palladium card and ski down their mountains of Bilt points…and more power to them. This isn’t meant to be a blueprint for the best way for everyone in the US to incorporate Bilt into their credit card portfolio; it’s simply a tour of what I’d consider the (probably unintentional) sweet spots.

Most of the folks who read Frequent Miler have limited annual spend. If that’s you, I think it’s worth looking at the examples above and asking yourself a few questions:

• “How much unbonused spending do I have each year, and how many new credit cards am I comfortable getting (and what do I estimate the minimum spend will be that I need to get open that many cards)?”

The difference between those two gives you an estimate of how much “everywhere else” capacity you actually have. I would never advise anyone to spend what they could put towards a new card welcome offer on a card that earns 2-3x.

For instance, if you have $12k per year in unbonused spending and want to get at least 2 new cards that you think will require ~$6k-$8k in minimum spend, the amount of spend that you need to put on an “everywhere else” card is $4k-$6k, or ~$400-$500 per month.

• “How much everywhere else spend do I have versus grocery?”

Some folks might find earning ~4.33-5 points per dollar on groceries a better fit, given how Bilt rewards lower spending levels. That’s complicated a bit by the 50,000-point bonus that Bilt is offering for the Palladium, but let’s put that in perspective: that 50k offer doesn’t even rank in the top 30 of consumer cards for first-year value on our Best Offers Page.

The reason that a comparatively modest, 50,000-point offer is noteworthy is that it’s a Bilt welcome bonus, NOT because it’s exceptionally valuable in and of itself. There are some out there who might be better served by opening up the Obsidian card with no minimum spend requirement, getting started using it for groceries, then saving the rest of their spend for one of those other 30+ cards whose first-year value exceeds the Bilt Palladium.

• “Can I process anyone else’s housing payment through my Bilt account?”

This will be a quick “no” for many people. Others, like me, have many friends and family who would be happy to set up a monthly transfer to me and have their housing payment deducted from my account. The most effective way to maximize Bilt’s program, as it currently exists, is to increase your monthly housing payment, not your proportion of spending relative to it.

That brings me to one final point. Bilt frankly seems to be, at least somewhat, making this up as they go along. I have zero confidence that the program will continue to exist in its current form for any length of time. We learned this even before Bilt 2.0, as it added restrictions to Rent Day and other promotions, removed common types of spend from earning points, etc…and that original program had many, many fewer moving parts than Bilt 2.0.

To me, the tiers of Bilt 2.0 option 2 seem like a loosely thought-out response to consumers’ lack of enthusiasm for the initial launch, and it bizarrely incentivizes you to spend less on the cards. My assumption is that it will change sooner or later.

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