Wells Fargo Bet on a Flashy Rent Credit Card. It Is Costing the Bank Dearly.

Wells Fargo's co-branded credit card partnership with fintech startup Bilt Technologies is causing the bank to lose up as much as $10 million monthly, according to a WSJ report. The bank agreed to a co-branded program with the fintech startup that most other big banks -- including JPMorgan Chase -- passed on, incorrectly modeled key assumptions and sees no path to profitability. The card, which allows users to pay rent without fees while earning rewards, has attracted many young customers. From the report: There is a reason why credit cards hadn't gained traction in the rent sector until Bilt came along. Most landlords didn't accept them because they refuse to pay card fees that get pocketed by the banks issuing them and often run between 2% and 3%. Bilt structured the card so landlords won't incur the fees. Wells instead eats much of that. About six months after the credit card was launched, Wells began paying Bilt a fee of about 0.80% of each rent transaction, even though the bank isn't collecting interchange fees from landlords. It appears that the problem for Wells Fargo is that Bilt customers are savvy. They are making the rent payments, but not carrying balances or doing any other transactions through the card.

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