A new Wells Fargo credit card program with a novel feature – you can use it to pay your rent – may not be working out quite as the bank had hoped.

Wells Fargo is losing as much as $10 million a month on the new card, the Wall Street Journal reports.

Launched in 2022, the card is a partnership between Wells Fargo and Bilt Technologies, a financial startup.

The partners wooed customers with an unusual feature: Cardholders could use the plastic to pay rent without triggering fees from landlords, all while earning reward points.

More than one million people activated the new card in the first 18 months, the Journal reports, many of them young renters.

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Banks make money on credit cards from customers who carry balances from one month to the next, racking up interest charges, often at steep rates.

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According to the Journal, Wells Fargo may have overestimated how many cardholders would carry balances on the new card, and the expected profits never arrived.

In response to the report, Wells Fargo spoke optimistically about the initiative and noted that it can take time for a new credit card to make money.

"While still small, the Bilt card offers an innovative and unique rewards platform that has allowed us to reach new and younger customers," the bank said in a statement to USA TODAY. 

"As with all new card launches, it takes multiple years for the initial launch to pay off, and while we are in the early stages of our partnership, we look forward to continuing to work together to deliver a great value for our customers and make sure it’s a win for both Bilt and Wells Fargo."

Both partners see the venture as a long-term investment, bringing in new customers with good credit and years of banking ahead of them.

Of the new credit-card holders, 70% "are actually brand new customers to Wells Fargo, and their average age is 31, and their average FICO score is 760," all desirable metrics, said Sean Walsh, chief communications officer at Bilt Rewards.

Walsh added, "There's always a cost of acquisition when it comes to new customers."

Ankur Jain, CEO of Bilt, responded to the Journal report on X, writing that the business partners "are committed to making this a win-win together."

New credit card breaks new ground with renters

The new card broke new ground by working around the fees that typically come with credit-card purchases.

In the past, the Journal reports, few landlords would let a tenant pay rent with a credit card because of those fees, which can run between 2% to 3% of the transaction total.

The new card skirts those fees, at least on rental payments. Instead, Wells Fargo “eats” most of those costs, the Journal reports.

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Wells Fargo launched the card partly with the hope of attracting younger renters, who might eventually become homeowners and might even take out mortgages from the bank, the Journal said.

The bank assumed more than half of all charges on the new cards would carry over from month to month, generating interest.

But the cardholders have proven savvy borrowers: At least 75% of charges are paid off before interest accrues.

Many customers pay their rent off within days of charging it on the card, averting interest while still earning reward points.