New X1 Rewards Credit Card Offers Low APR, No Late Fees

Features include credit limit increases based on income, not credit score

X1 credit card

A newcomer to the credit card marketplace is targeting a younger, digital-first audience with a variety of unusual features, including no late fees, a below-average interest rate, and frequent credit limit increases based on income rather than credit score.

The new X1 Card, now taking sign-ups for a waitlist, was started by Twitter alums and is backed by PayPal co-founder Max Levchin, among others, X1 said in a statement Thursday. Features for online-savvy consumers include distinctive account management tools. For example, temporary virtual account numbers automatically expire so free trial subscriptions don’t lead to unwanted recurring charges.

Key Takeaways

  • The X1 Card targets a younger online savvy audience with a below-average APR and no late fees. 
  • Instead of relying on credit scores, the X1 Card will use cardholder income to determine spending power, updating credit limits as often as possible.
  • Account management tools are competitive, helping cardholders to avoid unwanted subscription charges, and allowing them to attach receipts to purchases, and shop online with single-use virtual card numbers  

“Very few people are doing any of the things they are mentioning,” said David Shipper, a senior analyst for market researcher Aite Group who focuses on payment cards. “Even some of the newer challenger banks don't really offer products with these benefits.” 

The X1, the latest payment card product launched by a so-called fintech company rather than a traditional bank, underscores a trend that is likely to continue as new payment processing systems make it easier to quickly launch competitive offers, Shipper said.

The Chime Credit Builder Visa Secured card and the Point debit card, two other fintech cards unveiled earlier this year, are designed for consumers seeking less risk and more control over their finances and credit. SoFi, the student loan refinancing company, is planning on launching its own branded credit card this winter, too.  

No Late Fees, Competitive Rates

The new X1 Card, made of pure stainless steel, doesn’t charge an annual fee, and unlike most credit cards on the market, doesn’t assess a late fee, either. The Apple Card, the Petal 2 Visa Credit Card, and only a handful of others shun late fees. 

The variable APR will range from 12.90% to 19.90%—pretty competitive considering the average cash-back credit card APR is 19.07%. 

In terms of rewards, cardholders will earn 2 points on every $1 spent, with bigger spenders—those who spend at least $15,000 in a calendar year—getting 3 points per $1 spent the following year. There is a catch, though. Points can be used for just one thing: as a statement credit against purchases made with more than 40 partner retailers such as Apple, Etsy, and Wayfair. Points are worth at least the standard 1 cent each, and as much as 2 cents each for some retailers. 

Unlike many no-annual-fee rewards cards, this one doesn’t advertise a cash sign-up bonus based on spending, but cardholders can earn an elevated 4-points-per-$1-spent for a month for each friend they refer who opens a card. 

Unlike traditional cards that make a hard credit inquiry when a consumer submits an application, X1 Card said it will only make a soft inquiry to review credit history. Once an account is established, the credit limit will be determined by cardholder income, both current and future, the company said. Using that data, the X1 Card will update credit limits as often as possible, affording borrowers any possible upside quickly. 

The account management tools are also noteworthy, helping cardholders to avoid unwanted subscription charges, attach receipts to purchases, and shop online with single-use virtual card numbers, among other things.

The X1 Card won’t be available until winter, though the waitlist for applicants is now open. X1 declined to comment on the bank officially issuing the card, but said it will be a Visa Signature card.