Advent of a New Credit Card-With a Silicon Valley Twist

If Deepak Rao Establishing his first start -up, in 2011, he put all of his business expenses on two personal credit cards, with a combined credit limit of about $ 3,000. “They’re all maxed out on a regular basis,” he said. “So far, I have never recovered my credit score.” Even after four years working on Twitter with the salary of a product manager, Rao still may not qualify for credit cards with the classes he wants: those that pay for vacations or give points to places he likes. to buy.

In his second start, Rao tried to solve that problem. The X1, a new credit card, is designed for people who want premium credit-with or without premium credit scores. It uses a novel underwriting process, which links a user’s bank account to determine credit limits in line with cash flow. The card promises up to five times higher credit limits than the average card.

The card itself is made of stainless steel – the kind of objet d’art that is announced like making a pretty clang when you drop it – but it’s meant to be used digitally, such as the Apple Card. It has an attractive app that empowers users to create disposable “virtual” cards, cancel subscriptions with one click, and perform anonymous transactions without providing a real name. or card number. Its points get a list of entrepreneurs who often go to the stereotypical tech bro: Peloton, Patagonia, Allbirds, and Airbnb.

Perhaps for that reason, the X1 has become something of a Silicon Valley lover, with a waiting list of more than 350,000 people, as of yet. Its investors include Affirm CEO Max Levchin, Box CEO Aaron Levie, and Yelp CEO Jeremy Stoppelman. “I consider it to be Silicon Valley’s response to American Express, which is really for the old guard at this point,” said David Sacks, the PayPal capitalist and alumnus who sits on the board of X1 and uses the card.

Other credit card startups seek to fill market gaps. Brex, which is worth nearly $ 8 billion, has created a card to use for startups that have funds but no revenue. carat does something similar for manufacturers who are locked into conventional finances. Both of the cards address the issue of credit for a novel business class and offer perks specific to their needs. The X1 hopes to do the same for consumers, specifically those who are mostly kids, have income, and live on their phones.

The X1 will begin rolling out waiting list cards this week, after testing the card in beta for the past six months. One of the X1’s beta testers, Akhil Bhandaru, told me that he spreads his costs across multiple credit cards to keep his overall credit usage short. Despite being a well -paid engineer at Amazon, his best credit card has a monthly limit of $ 4,500, because his credit history is so short. (He graduated college in 2020.) The X1 gave him six times as many credits and was better than any of his other entry -level cards. For the first time, she was able to use her own credit card points to pay for home flights to see her parents.

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