Capital One Launches A T-Mobile Credit Card — Might Signal Bigger Plans In Travel Cobrands

Capital One is out with a new T-Mobile credit card and I’m excited about the partnership – more for what I hope it signals than for the product itself.

It’s not that I am interested in the T-Mbbile Visa as such.

• It’s a no annual 2% cash back card but where you have to spend the cash with T-Mobile. Just get Citi Double Cash!
  
• The $5 monthly autopay discount that still works with a credit card when paying a T-Mobile bill with this card, and 5% back on devices and accessories don’t really change that calculation for me.

It’s still a really interesting product launch because it’s great to see Capital One getting increasingly aggressive in the co-brand space… and hopefully making inroads in travel cobrands soon.

The bank offers general travel rewards cards (e.g., the Capital One Venture Rewards Credit Card) that allow transfers to many airline and hotel loyalty programs. And it issues store-co-branded (retail) cards. Capital One has offered Williams-Sonoma, Menards, Bass Pro Shops and Walmart (2019-2024) cards. It’s not like they’re new in retail, though they haven’t been huge in the space either.

Capital One also ran an affinity platform called Card Lab Connect starting in 2009 that let nonprofits and school-affiliated orgs (including alumni associations e.g. Duke University Alumni Association; University of Utah Alumni Association; University of Wyoming Alumni Association; UT San Antonio Alumni Association; Wellesley Alumnae Association) issue co-branded cards.

However that business was killed by the CARD Act (2009) and its Reg Z rules.

• Under-21 ability-to-pay / cosigner requirement. Issuers can’t open (or raise limits on) credit cards for consumers under 21 without either (a) independent ability to pay or (b) a 21+ cosigner who assumes liability. That was the end of the classic “freshman table” where I got my first credit card. University students are attractive to issuers because of their future income potential and they’re getting ’em young.

• Campus marketing restrictions. Bans on offering “tangible inducements” (pizza/shirts, etc.) when the offer is made on campus, within 1,000 feet of campus, or at college-sponsored events.

• Transparency & reporting of college/affinity deals. Schools must publicly disclose their marketing contracts with card issuers, and issuers must file those agreements and payments annually. That meant more scrutiny and reputational risk for universities in doing these deals.

But they haven’t been active in travel cobrands. That could change, especially with Wells Fargo pulling back from their brief effort to grow a cobrand portfolio (e.g. Bilt, Expedia, Choice).

Capital One has two Senior Vice Presidents in card partnerships, a Managing Vice President and General Manager and a team managing the business and also team running business development.

One ex-Capital One card staffer left to run cobrands at Hilton before returning to do partner business development. And they were recently hiring in card partnerships business development, in card partner marketing and in card partnerships legal.

I’ve heard chatter about Capital One getting involved in the deal pipeline with some pretty big travel cobrands. They’re one of the few banks large enough that they could land a big player in travel. And they’ve been establishing themselves in the premium travel space over the past four years which elevates their profile and credibility with potential partners.

I want to see more cobrand deals like T-Mobile, and potential smaller ones in travel, which better position them to compete with Chase, American Express, et al for airline and hotel cards – although they are known to be somewhat quirky at times with card approvals which I love less. In the meantime I do like seeing the gains that have been made by Cardless with smaller players – and in a few months Bilt – because competition is good for consumers.