Update: [Product details expired]

Reader Lee Y. asks my take on the upcoming X1 Credit Card which isn’t available for application yet.

Here’s what we know:

• No annual fee, no late fees, no foreign transaction fees
  
• Up to 4% rebate
  
• Stainless steel

They seem to make a big deal about the look and feel of the card, but at an advertised 17 grams this is no heavier than an Amex Platinum and lighter than Citi Prestige (18g) and J.P. Morgan Reserve (27g), and only a hair heavier than Capital One Venture (16g).

Your Income Not Your Credit Score

Much of the coverage of the card has focused on determining your credit line ‘based on your current and future income’ not your credit score. What this means isn’t entirely clear. I haven’t seen them say they don’t look at credit scores to approve cardmembers for the product.

They suggest that “some customers” can expect credit limits as much as 5 times higher than with another credit card, but that’s a pretty meaningless claim since almost any card issuer can make it. It’s like saying that a majority of people who switch to [particular car insurance company] save money, that’s because nearly the only people who switch are those getting a better deal.

They’ve got a different algorithm, it seems, but what this means in practice compared to meaningless marketing hype is simply not yet clear.

Potentially The Best General Rebate Card – But Average For Most?

Here’s the reward structure:

• 2x on all purchases
  
• 3x on purchases over $15,000 in a year
  
• 4x on purchases for a month for each successful referral to the card

We do not know yet how much each point is worth but for the sake of argument let’s assume one cent in value. The card website says that 45,000 points are worth “at least $450” but it’s not clear whether lower point totals can have a value that’s less than one cent, or will in the future.

We also don’t know how they’ll let you use the points, other than listing specific retail partners on their website including Airbnb, Alaska Airlines, Apple, Delta, HotelTonight, JetBlue, Nike, Sephora, and zipcar.

This card is presumably a 2% back card at a restricted set of merchants, though it gets up to 3% for spend over $15,000. You have to discount that if the choices of how to use the points are restricted, since that’s not as valuable as cash. And for most people spending up to or not much more than $15,000 a year then the Citi® Double Cash Card is better since that’s going to generate 2% back in real cash.

Where this card shines is for folks who can generate a lot of referrals. 4% back, even with a restricted set of merchants, it a pretty good return for otherwise-unbonused spend. It won’t get my travel, dining, or other category bonus spend where I’m already doing better than this (5% – 9% effective return) but it serves a role at merchants not bonused by other cards.

Still, it could be strategically useful for big unbonused purchases – refer a friend or family member so that you can qualify for a 4% rebate, then make your large purchase as a one-off.

Cancel Recurring Payments

The card helps you avoid getting hit with recurring payments for services you’re not interested in. They offer virtual credit card numbers so services can’t keep billing you, and there’s a feature of their app to cancel subscriptions that are being billed to the card.

A lot of businesses rely on providing low value at low prices, with transaction costs to cancel so high that people don’t bother. In other words, effectively taxing consumers. Card issuers should help customers avoid these traps – while respecting the merchants they work with who provide genuine value for subscriptions.

X1 Card’s Bottom Line

We don’t know enough about this product yet to have a real idea of its value – if you can actually generate a 4% return through spend and referrals that’s going to be really strong, but most people won’t be able to successfully refer someone every month. 

Referrals aside then we’re talking about 2% back on the first $15,000 of spend each year. This card is only interesting for spend above $15,000 to get to 3% back. But you’re going to have to spend substantially more than $15,000 on the card before you’re really getting enough value to make the higher rate of return worthwhile.

What do you think of the X1 Card coming ‘winter 2020’?