Upgrade launches checking accounts and debit cards – ProWellTech
The startup Fintech Upgrade has positioned itself as a neobank. Still, the company has mainly focused on personal loans and more recently on credit cards. You couldn’t just replace your bank account with Upgrade. The update is adding two important missing pieces to the puzzle with checking accounts and debit cards.
With today’s launch, Upgrade competes more directly with other competing banks, such as Chime, N26 and others. You can open a checking account, check it from a mobile app, send and receive money from that account.
There are no monthly fees and no minimum account balance. Under the hood, Cross River Bank provides FDIC insured checking accounts.
You also get a debit card with your checking account. When it comes to ATM withdrawals, Upgrade will refund ATM fees for its most loyal customers up to five times a month. You must maintain a minimum balance or set up direct payroll deposit for that feature.
Debit card payments on subscriptions and common daily expenses allow you to earn 2% refund. Eligible purchases include convenience stores, gas stations, restaurants, food deliveries, etc. You earn 1% on other debit fees.
Rewards on debit card transactions are quite rare. Most financial companies focus on credit card rewards as the interchange fees on credit card transactions are much higher. Debit cards don’t generate as much exchange revenue.
“Neobanks in particular cannot pay high premiums (or any premiums) with debit cards because interchange fee is often their only source of revenue,” Upgrade CEO Renaud Laplanche told me in an email.
And interchange fees can go up if you can attract millions of customers. According to The Information, Chime generated more than $ 600 million in revenue last year thanks to interchange fees.
The firm still expects to generate the vast majority of its revenue from credit products. “Our strategy is to monetize our base through credit,” Laplanche said.
Upgrade also offers a credit card with a 1.5% cash back on all purchases. If, for one reason or another, you can’t pay your monthly balance payment, the company helps you combine your monthly expenses into installment plans that you can pay back in 24-60 months. You pay the balance at a fixed rate with equal monthly payments. Upgrade customers who use the company’s checking account will get lower rates on upgrade loans.
You can also get a personal loan from Upgrade without a credit card or current account. And maybe you will end up discovering the other Upgrade products after taking out a personal loan.