When Renaud Laplanche started Upgrade in 2017 there were high expectations that the fintech pioneer would be breaking new ground with his second startup. After leading LendingClub from inception through IPO to the leading personal loan provider in the country everyone wondered what he had up his sleeve with Upgrade.
At his LendIt Fintech USA keynote in 2018 Renaud first teased us with his idea of the revolving personal line of credit. And he then confirmed earlier this year in his 2019 LendIt keynote that an Upgrade card was coming. Today is the day, the Upgrade Card has officially launched and it could be a game changer for the industry.
I caught up with Renaud earlier this week to discuss this new card and what it means for Upgrade and for the future of credit cards. He first pointed out that the concept of minimum monthly payment, that is a feature for most credit cards, is such a bad idea for consumers. It is detrimental to consumers’ financial health because it can take decades to pay off a credit card balance and result in a total payment often more than double the original amount.
He argues that this kind of credit card is fundamentally flawed and that a new approach is needed. He said:
I am genuinely more excited about this product than when I first launched online personal loans over a decade ago. We have refinanced tens of billions of dollars in credit card debt but still the overall outstanding balance keeps increasing. It feels good to get to the heart of the problem and create a more responsible card.
How Upgrade Card Works
You can think of Upgrade Card as a cross between a traditional credit card and an installment loan. Once they pass underwriting a customer is approved for a credit limit as you would expect. The difference is how the outstanding balance is paid back. Also, to be clear Upgrade is not calling this a credit card, it is simply Upgrade Card because they want to position it as a better alternative (an upgrade if you will) to a credit card.