Fintech Upgrade launches debit-credit card hybrid

Upgrade, a fintech company that offers personal loans, cards and current accounts, has launched a new hybrid card that includes features from both credit and debit cards. The card enables users to pay for a purchase immediately without interest or to pay it off over time with a fixed interest rate. However, the card has a lot of fine print to sift through to maximize its benefits.

About the new OneCard upgrade

Upgrade started as a personal loan company, but moved into card services when it launched the upgrade card in 2019. Technically not a credit card, the upgrade card works more like a personal line of credit with a fixed interest rate and repayment term, helping users avoid the minimum payment trap of a traditional credit card.

On Wednesday, Upgrade announced a new card, the Upgrade OneCard, which takes its unique approach to a new level.

With Upgrade OneCard, users can choose to pay off the purchase now via a linked current account or to pay it off over time with a fixed interest rate and monthly term.

Rewards

New cardholders can earn a $400 welcome bonus when they open a Rewards Checking account and make just three qualifying purchases on their OneCard or debit card within 60 days of opening their OneCard account.

Regardless of which payment option they choose, cardholders can also earn 3% cash back on purchases at convenience stores, pharmacies, restaurants and bars – including delivery – and gas stations, as well as recurring payments on utilities and monthly subscriptions, including phone, cable, TV and other streaming services. All other purchases net 2% cash back. Rewards are earned when you pay back purchases and there is a limit of $500 in cash back per calendar year for 3% reward categories.

However, to qualify for these reward rates, you must open an upgrade rewards account and maintain one of the following on the account:

• Average daily balance of $2,500 or more.
• Direct deposits of $1,000 or more.
• Eight or more qualifying purchases with your Rewards Checking Debit Card.

If you don’t meet one of these requirements during a particular account cycle, or you choose not to open a Rewards Checking account with upgrade, you’ll only earn 1.5% back on all your purchases.

Other terms

There is a lot going on with Upgrade OneCard. Here is a summary of the other terms you should keep in mind:

• Charges: The card does not require any fees.
• Interest: As previously mentioned, Upgrade offers a fixed interest rate, which is rare with traditional credit cards. Starting in July 2022, rates range from 8.99% to 29.99% APR, depending on your creditworthiness.
• Credit limit: Depending on a number of factors, your credit limit could be as high as $50,000, but Upgrade says most credit limits are $25,000 or less, with a minimum of $500.
• Increased purchasing power: You can get up to $5,000 in extra spending power if you open a Rewards Checking account and use it as your card payment account, maintain a positive account balance and keep your OneCard in good standing.

Too complicated for its own good?

Upgrade OneCard has an impressive value proposition: the chance to earn 2% or more back on every purchase with the flexibility to pay now or later, a solid welcome bonus and a fixed interest rate when you need to pay over time.

But Upgrade requires cardholders to jump through hoops, which include switching their main bank to Upgrade, to maximize their rewards. If you’re happy with your current checking account or don’t want to switch to a financial institution that doesn’t offer a savings account or other banking products, you’re not going to get enough value from the card to make it worth your while.

That is not to say that consumers should avoid the card. If you’re willing to dig into the fine print to understand exactly what you need to do to maximize rewards, and doing so wouldn’t be a huge disadvantage, the card can beat even some of the best cash -back the credit cards on the market.

But take the time to understand what the card requires and whether the extra work is worth it to you.