Rewards expert who writes the “Cashing In” reader Q&A column for CreditCards.com
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We are used to seeing rewards credit cards affiliated with stores, airlines and hotels, but seeing a bank team up with a popular ride-sharing app? That seems like a new and significant move. Uber, working with Barclaycard, announced the cash back card in October, and the card rolled out Nov. 2.
What makes the Uber Visa different from most rewards credit cards is not just its rewards structure – though that is interesting – and we’ll get to that in a moment. No, what’s most intriguing about the Uber Visa is just how obviously it is designed to appeal to the millennial generation, which consists roughly of those now aged 20 to 35.
Several card issuers courting millennials
Chase’s Sapphire Reserve, launched a little over a year ago, was the first rewards card designed to appeal to millennials, but that is a premium card with a $450 annual fee. Chase says millennials snapped up the card, no doubt to score the initial 100,000-point sign-up bonus, and in such numbers that Chase ran out of the metal cards ran out in just the first few weeks.
The success of the Reserve led issuers to roll out other premium cards aimed at millennials (U.S. Bank’s Altitude Reserve, for example), to tweak existing card rewards (Uber credits with the revamped Platinum card from American Express and Capital One’s Quicksilver Cash Rewards card’s Spotify discount and Capital One’s new Savor dining rewards card).
And now there’s the Uber Visa. Expect to see more cards targeting millennials. Uber’s competitor, Lyft, is also said to be working on its own credit card.
Uber card tailors rewards for millennials
Think about our conception of millennials and what they do: Millennials are urban dwellers who take Uber from bar to bar, order lots of stuff online and live their lives on their smartphones. On each of those scores, the Uber Visa card has millennials covered. It seems that almost every aspect of the card was built using data on what we know about millennials and their habits.
The Uber Visa is a no-annual-fee, cash back card, which makes sense because surveys shows millennials prefer cash back to miles over every other age group. (No annual fee and cash back also separate the Uber card from the high annual fee cards currently wooing millennials.)
The Uber card’s cash back rewards also are perfectly tailored to millennials. For example, Uber cardholders will earn 4 percent back at restaurants, which marketing materials helpfully describe as “restaurants, takeout and bars.” Millennials, it turns out, are the least likely to cook at home.
Uber cardholders also earn 2 percent on all those online purchases – including Uber, “online shopping, video and music streaming services.” The card also comes with up to $600 of insurance against theft or damage of those ubiquitous mobile phones, if customers pay their monthly bills with the card. And customers who spend $5,000 or more a year receive $50 off subscription services including Netflix, Spotify and Hulu – all heavily used by the younger generation.
The Uber card also offers 3 percent back on hotels and airfare, which is one of the few traditional benefits with the card.
About the only perk the Uber Visa doesn’t come with for millennials is beard trimmers, or perhaps built-in career coaching and mentoring that people in their 20s are said to crave.
Millennials as coveted consumers
There is little doubt that card companies are paying attention to the millennial generation and its financial habits, which differ from previous generations.
According to research from Visa, millennials will represent 75 percent of the workforce by 2025. They are more likely to use cards than other generations, open to new payment possibilities such as mobile wallets, and are concerned about budgeting and debt.
Millennials also are more likely than any other age group to carry a credit card balance. Card companies want to get ahold of these consumers while they are young, build relationships with them, then profit as they become more wealthy.
The Uber Visa will appeal to people – regardless of age – who spend money dining out and shopping (and doing so much more) online.
The 4 percent back on dining is the highest I’ve seen for that category. The 2 percent back on online shopping is a category bonus I’ve never seen before. The cellphone insurance is intriguing, too. Other cards offer smartphone insurance, but none advertises that perk as prominently as this card.
Millennials are shaking up a lot of things. They are altering workplaces, advertising and technology. Now, it seems they are changing credit card rewards, too.
See related: Millennials reap latest perks in credit card rewards wars, Infographic: Millennials strongly prefer cards, What millennials can teach us about credit, Infographic: Credit card love from older millennials