Podcast: Bilt is costing Wells Fargo dearly. Should you duck & run or double down? | Coffee Break Ep15 | 6-18-24


The Wall Street Journal published a report over the weekend that there is friction in the relationship between Wells Fargo and Bilt. Both Wells Fargo and Bilt released statements confirming their commitment to their partnership. Did the details match the headline? What did the article actually say and what do we make of it? Find out on this week’s Coffee Break.

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(00:00) The Wall Street Journal reported friction in the relationship between Wells Fargo & Bilt. What was reported and what do we make of the details? Find out in this episode of Coffee Break.

(01:16) What the Wall Street Journal Article says

(02:01) Digging into article details a bit about the Bilt / Wells Fargo relationship

(06:34) Fraud and Money Laundering Concerns

(09:44) The Wells Fargo and Bilt response

(10:34) WSJ article key points quick summary

(11:12) Our take about what this all means

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I’ve had to get a new card 3x already (in 1.5 years) because of fraudulent charges. This has happened maybe once in decades with another of my (many) cards. So of course that makes me less likely to use Bilt for more purchases than the minimum necessary- maybe Wells Fargo should work on that.


Gee, wonder who in the “Club” came up with that scam, lol


I think that we might see some changes like increasing the minimum transactions to get rent points like from the actual 5 transactions to 15 or 20 transactions in addition to rent. This way they may offset partially with swiping fees.


I hadn’t realized until this article and your discussion on it that the Bilt fraud issues stemmed from an inadequate pseudo-random number generator. I’m not in the financial software space to know the specifics on generating card and account numbers but do work in cybersecurity and hang out with enough computer science nerds to feel like… that seems like a glaring oversight for a Fintech. It’s not like mainstream banks have great functional websites and backend systems either (there’s no IT in Citi). But it raises some valid concerns about how well developed Bilt’s systems are when they are focusing primarily on growth. Move fast and break things I guess?


One thing I cannot believe still exists is Bilt Protect, where your rent payment is immediately pulled from your bank account, leaving available credit on the card untouched. I use that exclusively, to preserve my full credit limit; if WF wants to improve the economics of the card, eliminating that option has to be something they start with.


Why would this help? I think it would hurt. One of the problems mentioned was the 35% non-rent usage that they were expecting to be 65%. I’ve already been reading about remarkably low credit lines (WF’s decisions), which I feel is part of the reason for this inversion. This feature theoretically helps, not hurts.


I think you are correct that there is very little risk that Bilt points will suddenly disappear. I am worried though about how all this impacts what makes Bilt points so valuable: the probability of large transfer bonuses in the future. You do not directly address how the info in the WSJ article does or doesn’t affect this probability. I think if anything it reduces the probability of juicy future bonuses what with WF telling Bilt the current business model is not making enough $$$. So that makes me think I should put less spend on my Bilt card unless and until I see more big transfer bonuses. And maybe if we do get another big transfer bonus it might be time to transfer all my Bilt points.


If there is no transfer bonus in August, the quarterly transfer bonuses are likely dead and the best we can hope for is an annual transfer bonus. Nick has a strong argument that Alaska (or any other US-based program) would be unlikely. I’m pulling for Emirates.


Bilt gets a cut of the interchange fees, partly for managing the loyalty program, so it bears the cost of those transfer bonuses. It’s highly likely that Bilt would be forced to renegotiate its agreement with Wells, and a revised agreement will surely leave Bilt with less to fund such promotions that help attract new cardholders and entice existing cardholders to put more spending on the card. Without such promotions, it’s likely that Bilt wouldn’t be able to grow beyond its core base of young creditworthy and travel-loving renters.

Last edited 25 days ago by Tony

I didn’t mean to say that Bilt bore ALL the cost of those massive transfer bonuses. Loyalty programs do typically incentivize credit card programs to promote transfers to their programs. However, those incentives are much smaller than what Bilt had previously offered on their Rent Days. And more importantly, the rest of the cost is borne by Bilt, not Wells.


Bilt’s current business model relies on rapid growth (which covers a lot of sins). With the negative publicity due to the WSJ article, the pace of acquisition of new cardholders will undoubtedly slow down (perhaps dramatically). It’s highly likely that Wells will be able to renegotiate its contract with Bilt, leaving Bilt with fewer means to fund its growth and offer meaningful enticements to attract new cardholders. Those massive transfer bonuses are almost certainly history. Instead, Bilt is likely to focus on offering incentives so its cardholders would use their cards more often on everyday spending. I’m not worried about Bilt going out of business, unless cardholders all start transferring their points out (which would likely raise the upfront cost to Bilt so much that it can’t afford at this point).


Looks like their response was missed to the WSJ piece. Don’t know when it was recorded but https://www.pymnts.com/credit-cards/2024/wells-fargo-and-bilt-deny-rocky-card-relationship/


If a typical hobbyist is only using the Bilt card for rent (and putting all other spending on other cards), exactly what is at risk to the hobbyist? Points that one would not have otherwise received on any other card?


I disagree with your analysis regarding WF’s cost of customer acquisition. Even though on average banks pay close to 1k per customer and WF is paying only 200, normal card issuers start to make money on interchange fees right away. But with Bilt, WF loses money on each rent related transaction. So they earn fees on only 20% of the volume. Their economics is a lot worse…


Tried to transfer some points for the first time since yesterday. No matter which program, I always get an error:


Something went wrong and your points weren’t transferred. Please try again.

Several other people are reporting the same issue on Reddit, with some not very helpful canned replies from Bilt (log out, try again).


No, I am in the US, and the transfer targets I tried aren’t new (or empty) loyalty accounts. They even had been linked to the Bilt account for months. And we aren’t talking about a large transfer, just a few thousand points that have been built up through the Rent Day games.

The problem occurs with my wife’s Bilt account (that I manage). I was able to transfer my own Bilt points successfully, then logged into her account on the same devices (tried phone and iPad). Maybe Bilt didn’t like that.


Thank you! You guys are great.
Disagree with your assessment. Yes, BILT is making big dough. WF is losing their shirt and will find away to drastically diminish its rewards and/or find a legal reason to sue to void the contract. Notice the recent and consistent absence of the previous awesome transfer bonuses (you have mentioned that you’ve noticed). Transfer out now.


*crosses fingers for an Alaska transfer bonus


Wish is granted.