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Zurp is a young company, founded in 2022, which recently launched its first credit card. According to the firm’s website, “Your Zurp account functions more like a checking account with a secured credit card on top.” There are some attention-grabbing benefits:
- A 5.00 percent annual percentage yield on deposits, including FDIC insurance via Zurp’s partner First Pryority Bank. Zurp assures me that customers’ deposits are protected by FDIC insurance at all times, including when funds are en route to First Pryority Bank (note, the standard FDIC insurance limits: $250,000 per depositor per ownership category).
- Up to 8X points per dollar on credit card purchases.
- Experiential rewards ranging from concert, theater and sports tickets to helicopter rides, meet-and-greets with cardholders’ favorite creators, access to limited edition products, free food, rideshare credits and more.
The 5.00 percent APY on deposits is my favorite aspect of the Zurp Card. That’s near the very top of the market (in our database, only UFB Direct has a slightly higher APY, at 5.02 percent). Zurp does not have a minimum balance requirement or a monthly account maintenance fee. One important piece of fine print is that Zurp customers must make at least five point-of-sale transactions or receive one direct deposit to earn interest in each monthly statement period.
The only fees that Zurp charges are for certain international transactions and some replacement cards. Notably, Zurp does not assess ATM fees, although it’s possible that ATM owners might charge their own fees.
Zurp’s target audience is young adults. Its branding appeals to Gen Zers with phrases such as, “No debt. Build credit. Get experiences.” The neobanking space is crowded, as many app-based startups are trying to woo Gen Zers with trendy takes on app-based financial services. Zurp’s 5.00 percent APY definitely stands out.
Credit card features
Zurp is unusual in marrying a bank account with a linked credit card. It’s a version of a secured card, since the credit limit matches the user’s cash account balance. It’s also a charge card, so cardholders can’t carry a balance from month to month. The credit card is widely accepted since it processes on the Mastercard network.
At first blush, the rewards categories seem very impressive:
- 8X points per dollar on groceries, restaurants, food delivery, travel, entertainment and rideshares
- 1X point per dollar on rent or mortgage payments
- 3X points per dollar on all other purchases
I’m concerned, however, that these payouts sound better than they really are. Unlike most credit cards, Zurp points can’t be redeemed for cash back or travel — at least not in the traditional sense. Instead, they’re used to offset specific goods and services offered by Zurp’s partners. A representative provided examples such as 85,000 points for a one-year Spotify membership and 12,000 points for a Chipotle meal. I ran the numbers and wasn’t impressed.
For instance, an individual Spotify Premium membership costs $9.99 per month ($119.88 per year). To earn 85,000 points, a Zurp cardholder would need to spend at least $10,625, and that’s assuming all of that spending was in an 8X category, such as groceries or restaurants.
Spending $10,625 to get $119.88 in value works out to an atrocious 0.14 cents per point. Even with the generous assumption that all of that spending took place in an 8X category, it works out to a mere 1.12 percent return on every dollar spent.
Considering several credit cards give 2 percent cash back on everything, this doesn’t seem like a good tradeoff at all — especially since Zurp’s redemption opportunities are much more restrictive. Plenty of other top rewards credit cards offer much higher earning potential in terms of cash back or travel benefits.
I ran my math by Zurp, and they pointed out two factors that could improve a cardholder’s return. One is that cardholders earn a wheel spin in the app every day they spend $5 or more. This is a gamification element that can add up to 1,500 bonus points per day.
Zurp says most spins generate at least some kind of win for the user. The company estimates that, over the course of a year, the 8X categories really earn more like 11X points per dollar once earnings from wheel spins are factored in. That would require spending $7,727 to earn the annual Spotify membership that’s worth approximately $120 (a 1.55 percent return).
Again, though, this represents the best-case scenario. Most purchases only earn 3X points per dollar, so even factoring in the added earnings from wheel spins, it’s likely that many cardholders would receive a blended return below 1 percent. That’s not very competitive.
Zurp also pointed out that they offer a 30,000-point introductory bonus. It’s doled out in three installments: 10,000 points on account opening, 10,000 more points after new users deposit at least $100 and an additional 10,000 points after they spend $1,000 or more within their first three months.
While sign-up bonuses are certainly appreciated and improve cardholders’ first-year returns — to as much as 2.4 percent on every dollar spent in year one, according to Zurp’s calculations — I’m still skeptical. Again, that’s assuming a best-case scenario fully weighted toward 8X category spending, and it doesn’t factor in year two and beyond. Or the fact that other cards have sign-up bonuses, too. For example, there are plenty of no-annual-fee cards that offer new customers at least $200, sometimes with even lower spending requirements. And bonuses can go way up from there, especially on travel cards that charge annual fees.
The bottom line
I think Zurp’s banking offering is much more impressive than its credit card rewards program. The 5 percent yield on bank deposits is very competitive, and I also like the lack of fees. I could envision someone signing up based on those features alone. Building credit with the linked secured credit card could be worthwhile for credit builders or rebuilders, but you’re likely to earn much more lucrative rewards with a different credit card.
Have a question about credit cards? E-mail me at email@example.com and I’d be happy to help.