Despite credit being a critical component of a capitalistic economy, the extension of credit, and its consequent debt has reached a concerning level. Total US credit card debt hit an all-time high of $870 billion at the end of 2018, and, on average, people in the US hold roughly $3,100 in credit card debt alone.
Credit card debt, in particular, has been the cause of numerous stories where people carry over monthly balances — sometimes into the hundreds of thousands of dollars. And banks and credit card issuers benefit as a result of the overabundant desire for consumer shopping and high time preferences among the mainstream.
Similarly, credit card debt can completely wipe out credit scores, especially in younger generations who are not as adept in managing their finances as their older counterparts. Poor credit in younger generations makes it harder to own homes, which is at a low for millennials when compared to previous generations. More renting leads to increased financial burdens for younger people who do not reside in the upper tax brackets of income either.
Credit, financial comfort, and risk management are interconnected, and one company, Rebl, is seeking to upend the current credit card paradigm with their refreshing take on credit cards.
Redefining the Credit Card – Take Control of Your Finances & Rebuild Credit.
Rebl’s credit card is designed to help people manage their finances and build credit. They base their decisions on issuing cards to people on the assets they own, including their income and expenses as referenced by their 2048-bit encrypted verification of potential user’s bank accounts.
The goal is to discern a realistic limit, on a per person basis, for what their monthly limit can be that is reasonably expected to be paid in a consolidated 30-day payment — automatically deducted from the user bank account. Users cannot carry balances, and if the monthly balance is past due for too long, the user is at risk of having their account deactivated.
It’s a reasonable trade-off that can help bolster the credit scores of Rebl users (they report to credit bureaus like Experian), and to become more prudent in managing their own finances. Carrying balances over extended periods has historically turned our unfavorably for many credit card users, with downstream effects ranging from perpetual economic struggles to psychological disruptions.
Rebl hopes that by placing limits within financial reach, users will not be incentivized to spend more money than they have, even taking into account a better stock of their assets. In the future, the company plans on incorporating other assets such as stocks, bonds, commodities, real estate, and even cryptocurrencies to determine the limits applied to individual users.
Since there is no carry-over into another month and payments are due after each independent 30-day period, there is no interest accrued. Credit scores are not even factored into the card-issuance process, only the assets and income of the users and how that correlates to specific credit limits.
On top of that, Rebl even renders real-time notifications of spending activity with a built-in budget system for users to monitor their habits in a manner attuned to younger generations. Gen Z and Millennials hold among the lowest credit card debt compared to other generations, and they are increasingly seeking out better alternatives — like Rebl and open financial products.
Rebl’s concept may seem straightforward, but it’s essentially an untapped area because the veiled, and ubiquitous, nature of credit card issuance has led to credit card debt becoming a cultural standard. Surveying the results when entering keywords through Google search that mention “credit card,” and you will be bombarded with “best offers” and “lowest interest rates” by myriad companies seeking to profit off the subpar fiscal management skills of the public.
Rebl wants to change that narrative, and the Rebl credit card is an innovative method for people to take back control of their finances and boost their credit scores. Perhaps, Rebl may even level out those time preferences, fueling a more savings-focused economy than our current iteration of consumer-prone spending.