LendUp, a socially responsible lender for the emerging middle class, and Beneficial State Bank (Beneficial State), a social enterprise bank, today announced a significant expansion of the L Card, its credit card joint venture.
The move is expected to quadruple the availability of L Cards, a Visa credit card product designed by LendUp and issued by Beneficial State for consumers traditionally shut out of mainstream banking due to poor credit scores or damaged credit files. The expansion builds on the firms' partnership that extends back to the L Card pilot in April 2015.
"It's uncommon to find a fintech startup and a bank who are so completely aligned on the same North Star, but that's exactly the case with LendUp and Beneficial State. Like LendUp, Beneficial State is committed to expanding consumer credit access in a socially responsible way, and we're proud to call them our partner," said Sasha Orloff, LendUp co-founder and CEO. "Our partnership is a perfect example of bringing our house-built technology, product design and educational experiences to bear for a similarly mission-driven bank and well-deserving consumers across the country."
"We're so pleased to be the issuing bank for the L Card," said Daniel Skaff, president and co-CEO of Beneficial State Bank. "As a triple bottom-line bank and certified B Corp, it's critical that we work with fintech partners who share in our commitment to innovate, learn and build the long-term prosperity of responsible, deserving consumers -- and we've found just such a partner in LendUp."
According to the Credit Builders Alliance, a person with subprime credit pays on average $250,000 more in interest than borrowers with good credit over the course of their lifetime -- and that doesn't even include fees on financial products. In addition, according to LendUp research, many of its own customers are currently shut out of mainstream credit card products, such as rewards credit cards (98.5%) and retail rewards cards (66.5%).
In response, LendUp created a card for Beneficial State that meets borrowers' immediate credit needs while helping to build their long term financial health. Features include:
- Instant decisions
- No over-the-limit fees or security deposits
- Reporting to the three main credit bureaus
- Affordable payments
The L Card carries an annual fee of $0-$60 and APR ranging from 19.99% to 29.99%; it has a 4.8 average star review on CreditKarma.
"There's a huge addressable market, estimated at about $350 billion, for credit cards that serve consumers with credit scores below where a bank usually draws the cut-off line, at 680," said Orloff. "As a mission-driven company, we've built our business by putting the customer first -- that means house-built technology, embedded education, and safe, no-gotcha products. We are proving we can re-imagine credit products for the emerging middle class that make a positive impact on our customers' lives. With Beneficial State, we're more than ready to take it to the next level with the L Card expansion. Between our technology, product innovation and mission, we will continue to completely reimagine what had previously been known as the 'subprime' category and become these deserving borrowers' financial services partner of choice."
The news comes on the heels of LendUp announcing $1 billion in loan originations and a $100 million credit facility with Victory Park Capital in March, which will help fund the company's future growth.