Startup Launches Credit Card to Save for Down Payment
A real estate startup wants to help renters become homeowners. Bilt Technologies has teamed with Evolve Bank & Trust and Mastercard to launch a credit card Tuesday that enables cardholders to accumulate reward points they can use toward rent and other bills—or a down payment on a future home.
Many property providers already accept credit cards for rental payments. Paying by credit card also helps renters improve their credit scores, and a good credit score is important when buying a house. “We believe paying rent should build your credit score because it’s your single largest liability,” Bilt founder Ankur Jain told The Wall Street Journal. The new credit card does not have any added fees.
Bilt says that if the cardholder decides one day to use their points for a down payment on a home, Bilt says it will convert reward points into cash and deposit the money into an escrow account. “It should be a path to homeownership,” Jain told the Journal.
It will take time to accumulate enough points to make a sizable down payment. The Journal reports that a cardholder who spends about $1,500 on monthly rent for 10 years would accumulate enough points for a $6,000 down payment. However, tenants using any credit card to pay rent need to be careful. Credit cards usually come with high interest rates: The Bilt card, for instance, has an interest rate of between 15% and 22.5%.
Source: “Renters Could Collect Home Down-Payment Points With Credit Card,” The Wall Street Journal and Mastercard