Upgrade Card consumers will earn 1.5% cash back on all purchases made with the card — there’s no specific category, no partner retailer, no point system. It’s a straightforward, uncapped cash back program.
The company wants to encourage users to pay down their debt. So Upgrade isn’t encouraging you to spend more to earn more. Instead, you receive your rewards when you make your monthly balance payments.
With its credit card, Upgrade is trying to provide a consumer-friendly credit card. And Upgrade CEO Renaud Laplanche believes that it starts with lower rates. Instead of a normal entry rate of 12% to 13%, Upgrade promises an entry rate of 6.99%.
In order to avoid the endless trap of credit card debt, Upgrade combines monthly charges into installment plans that you can pay back over 24 to 60 months. You pay down your balance at a fixed rate with equal monthly payments. Of course, you can also prepay any amount — there’s no penalty.
When you sign up, you get a virtual card immediately and a Visa-branded plastic card a few days later. The company gives you a credit line of $500 to $20,000.
Over the past three years, Upgrade has issued more than $3.5 billion in credit. The company is now on a run rate of $125 million in annual recurring revenue. It is profitable.
Interestingly, Upgrade describes itself as a neobank. There are many successful neobanks out there — such as Chime, Revolut, N26 and Nubank — but most of them focus on checking accounts and debit cards. They mostly generate revenue from interchange fees on card transactions, premium subscriptions with insurance packages and referral fees.
Upgrade has started with a different product offering focused on credit, which generates a lot of revenue. The company is now working on other banking products so that it can become a true alternative to traditional retail bank accounts. They should launch new products in the coming weeks.