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X1 Visa credit card uses income, not credit points to determine spending limit

The new X1 Visa card, created by former Twitter executives with the support of PayPal co-founder Max Levchin, is scheduled for release this winter, and the company opened the waiting list this week. I signed up (there are about 23,000 people in front of me). You might want to too, because it sounds like the X1 card will be different from any credit card you've seen before. And it can be especially useful for entrepreneurs.

What's different about the X1?

1. It does not use credit scores to determine your credit limit.

"The consumer credit card industry has been virtually untouched by technology and has relied on the archaic credit rating system," co-founder and former Twitter chief Deepak Rao told TechCrunch. . Instead, X1

decides how much credit you should give yourself by looking at your current and future income. In comparison, credit scores are essentially an overview of your past – how much debt you have, and how good or bad you have been at paying your bills.

If you are an entrepreneur who has had large balances or ended up on payments while you started the company, but now earns a steady income, this can lead to higher spending limits than you would have with a traditional card. (Even if you do not need the upper limit, you will benefit from it, because having available but unused credit increases your credit score.)

For people who have recently entered the labor market and those who have not spent much Credit in the past, the X1 card can give you much more power – up to five times as much, the company says.

2. It has a generous rewards program – with a few caveats.

The X1 card gives 2X points on all purchases. It goes up to 3X if you spend $ 15,000 or more in a year, and 4X if you refer a friend who signs up. (You get a month with 4X per friend.) Assuming 1X equals 1 percent, which is often the case, this is a very generous reward system, commented CreditCards.com industry analyst Ted Rossman. One downside is that you can not exchange these points for cash, you have to spend them on participating sellers, but these include Delta, Alaska Airlines, JetBlue and Airbnb, as well as retailers such as Apple, Etsy and Ikea. There is a wide selection that you can probably find something you want to buy. And the X1 card makes it easy to redeem these points through the app.

Although 2 percent is fairly standard, reward levels of 3 and 4 percent are quite impressive, Rossman said. Maybe too much. "It almost sounds too good to be true. Not to be too skeptical, but I wonder how sustainable these rewards will be." At least for now, it sounds like a lot.

3. It provides painless subscriptions.

This is the feature that convinced me to join the waiting list. If you're like me, you have often signed up for services – websites, streaming channels, discount programs – that you do not stop using. But figuring out how to cancel is a problem, and you're busy, so you drop it and stop paying $ 9.99 or whatever for a new month. And then another.

The X1 card puts an end to this by letting you unsubscribe via the app with one click. It is a similar advantage if you sign up for a 14- or 30-day "free" trial period where you have to enter a credit card number that is charged automatically when the trial period is over. If you do not want this to happen, X1 will create a temporary virtual credit card that expires before the trial period ends. (Of course, if you want to continue after the end of the free trial period, you must provide another payment method.)

4. It is stainless steel.

X1 is not the only metal credit card out there, but it is one of the few that does not have annual fees, and metal cards have a certain cachet. To drive the point home, the X1 website lets you hear the sound of the card when it's dropped, an extra temptation I guess.

The X1 card is not here yet, so there are many unknowns. Will it really provide higher spending limits for people with low credit scores but decent incomes? Will it really be as easy as promised to unsubscribe from services – and will sellers accept the virtual cards that expire before a free trial period ends? Will the company continue its generous points plan, and will it add to its list of salespeople to make these points more valuable? And perhaps most importantly, how fast will the card roll out, and when will people actually be able to get one?

We have to wait a few months to learn the answers. In the meantime, it seems like a smart thing to spend a few moments to get on the waiting list.

Opinions given here by the Inc.com columnists are their own, not those of Inc.com.

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