Say hello to Credit Jar!

Last week we announced the very exciting news that we are partnering with Humm (the recently rebranded industry BNPL pioneer Flexigroup), to bring our customers a new kind of responsible buy now, pay later feature, which will be fully integrated into our smart bank account offering.

Saving for a rainy day

Recently we launched a dedicated Rainy Day Jar to help encourage people to put away money on payday to cover them for the unexpected.

Whilst we always want to prioritize helping our customers save to cover for emergencies, we are realistic to know that this takes time, and often paying down debt is of a higher priority for some people before looking to save.

So having listened to our customers, we have come up with a simple solution to compliment the Rainy Day Jar to support people when they need help the most. We call it Credit Jar.

What is this Credit Jar you speak of?

Like it or not, credit plays a critical role in overall money management. Our data has shown that some customers rely on traditional credit cards to help them cover emergency expenses and to buy things that they don’t necessarily have the money to pay for, leaving them to cover a monthly repayment that is increasing over time thanks to the power of compound interest (interest on interest).

We would much rather use this powerful force for good, to help people build wealth (more on that later) than getting caught in a spiraling debt trap. The Credit Jar is your helping hand, your crutch, you could say.

We haven’t changed our direction!

We remain laser-focused on our mission to help people better manage their money and live financially healthier. This means building out our financial wellness app that’s dedicated to helping our customers spend smarter, pay off debt, save more, and build wealth.

Wait for it, it gets better!

Our soon-to-be-launched Autopilot feature will sweep installment repayments out of a customer's Bills Jar to top up the line of credit on time, we will then report this activity back to the Credit Bureaus - TransUnion®, Experian®, and Equifax® to boost their Credit Scores. The longer the repayment history, the more Creditworthy a customer will become. Smart!

Why we’re not the biggest fans of credit cards

Credit cards entice inexperienced (and knowledgeable) people with a false sense of security, before eventually drowning them in debt. Studies have found that more than two-thirds of Americans have credit cards, and it's the fastest-growing type of debt in the U.S. after personal loans*.

It’s become the norm to borrow to buy, from restaurant meals, clothes, cars, hospital fees, and homes. Many people build up credit card debt because they're having trouble covering their basic living expenses and bills!

Most of the time purchases on credit cards could have been obtained by gaining the cash first, then buying the item later. This is often not the time frame consumers prefer or just isn’t possible if an emergency occurs. We want to cater to both these needs whilst always prioritizing for you to save and pay with cash at all times.

The problem is life happens. You end up with an emergency and have no other way than to swipe your card! The struggle to pay back the debt starts and you borrow more to cover that debt and the cycle continues. Well, no more!

What are the parameters around the Credit Jar?

Data we’ve collected so far has shown the need for a responsible, interest-free credit feature to help customers consolidate credit card debt and smooth out cash flow.

We will initially offer a credit limit of up to $1,000 linked to a dedicated virtual Mastercard, which can be loaded into Apple Pay, allowing customers to meet urgent expenses and have them repay in 6 automatic weekly installments.

Credit Jar will be very different from traditional point-of-sale BNPL offerings and represents a step-change in the model because we’re treating it as a credit product, which is what we strongly believe it should be.

Our solution will only be made available to customers who can easily service it as part of their everyday budget via our responsible lending criteria.

When will the feature be released?

We hope to have this new feature released in July 2021.

References:

* Experian. "2019 Consumer Credit Review.", https://www.experian.com/blogs/ask-experian/consumer-credit-review/, accessed Feb. 12, 2020.