December 6, 2022

X1 Visa Credit Card Uses Income, Not Credit Score to Determine Your Spending Limit

The new X1 Visa Card, created by former Twitter execs with backing from PayPal co-founder Max Levchin, is planned for release this winter, and the company opened its waiting list this week. I signed up (there are about 23,000 people ahead of me). You might want to as well, because it sounds like the X1 card will be unlike any credit card you’ve seen before. And it could be especially useful for entrepreneurs.

What’s different about the X1?

1. It doesn’t use credit scores to determine your credit limit.

“The consumer credit card industry has been almost untouched by tech and has relied on the archaic credit score system,” co-founder and former Twitter exec Deepak Rao told TechCrunch. Instead, X1 determines how much credit to give you by looking at your current and future income. By comparison, your credit score is essentially a record of your past–how much debt you have, and how good or bad you’ve been about paying your bills.

If you’re an entrepreneur who ran up big balances or fell behind on payments while you were getting your company started, but are now earning steady income, this could lead to higher spending limits than you would have with a traditional card. (Even if you don’t need the higher limit, you will benefit, because having available but unused credit raises your credit score.)

For people who have recently entered the job market and those who haven’t used much credit in the past, the X1 card may give you much more spending power–up to five times as much, the company says. 

2. It has a generous rewards program–with a couple of caveats.

The X1 Card offers 2X points on all purchases. That goes up to 3X if you spend $15,000 or more in a year, and 4X if you refer a friend who signs up. (You get one month of 4X per friend.) Assuming 1X equals 1 percent, as is often the case, this is a very generous reward system, commented industry analyst Ted Rossman. One drawback is that you can’t exchange these points for cash, you have to spend them at participating merchants, but these include Delta, Alaska Airlines, JetBlue, and Airbnb, as well as retailers like Apple, Etsy, and Ikea. There’s a wide enough range that you can likely find something you want to buy. And the X1 card makes it easy to redeem those points through its app.

Although 2 percent is fairly standard, reward levels of 3 and 4 percent are pretty impressive, Rossman said. Maybe too much so. “It almost sounds too good to be true. Not to be too much of a skeptic, but I do wonder how sustainable these rewards will be.” At least for now, it sounds like a great deal.

3. It offers painless unsubscribes.

This is the feature that convinced me to join the waiting list. If you’re like me, you’ve often signed up for services–websites, streaming channels, discount programs–that you don’t wind up using. But figuring out how to cancel is a hassle and you’re busy, so you put it off and wind up paying $9.99 or whatever for another month. And then another.

The X1 card puts an end to that by letting you unsubscribe via its app with one click. There’s a similar benefit if you sign up for a 14- or 30-day “free” trial where you have to put in a credit card number which will be charged automatically once the trial period ends. If you don’t want that to happen, X1 will create a temporary virtual credit card that expires before the trial period is up. (Of course, if you do want to continue past the end of the free trial, you’ll have to provide a different payment method.)

4. It’s stainless steel.

The X1 isn’t the only metal credit card out there, but it’s one of the few that don’t have annual fees, and metal cards have a certain cachet. To drive home the point, the X1 website lets you hear the sound of the card as it’s dropped, an added enticement, I suppose. 

The X1 card isn’t here yet, so there are a lot of unknowns. Will it really provide higher spending limits for people with low credit scores but decent incomes? Will it really be as easy as promised to unsubscribe from services–and will merchants accept the virtual cards that expire before a free trial ends? Will the company continue its generous points plan and will it add to its roster of merchants to make those points more valuable? And perhaps most important, just how quickly will the card roll out, and when will people actually be able to get one?

We’ll have to wait a few months to learn the answers. In the meantime, spending a few moments to get on the waitlist seems like a smart thing to do.

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