Radius Bank is hoping to entice Millennial customers with a new debit card that uses rewards to help customers pay down their student loan debt.
The bank partnered with Gradifi, a Boston-based fintech company, to launch its new MasterCard. Cardholders earn 1 percent on purchases to be applied toward their student loan balances. Gradifi has previously worked with employers to offer employer-based student loan pay-down perks, and this latest venture represents one of several partnerships Radius Bank has made with area fintech companies.
“The product is outstanding. It addresses a huge world related issue on student debt,” Radius Bank President and CEO Mike Butler said. “We see Gradifi as a platform that will attract a huge number of Millennial clients that we would like to market to.”
The bank will launch the card this fall, it said in a statement. The card is offered through an FDIC-insured checking account with Radius Bank.
Of the 110 basis points available on each card spend, Gradifi CEO Tim DeMello explained that his company keeps 10 basis points and funnels the remaining 100 basis points toward the customer’s student loan balance through Gradifi’s own payment processing platform.
DeMello also said his company is looking at developing other programs to help tackle the nation’s $1.3 trillion in student loan debt and plans to announce three or four other programs by the year’s end.
“Gradifi looks at it as, ‘How we can help you get out of debt faster?’ We have a lot of employer programs. We also looked at a lot of consumer programs and various ideas for how you can do it, from gifting programs to shopping programs. Anywhere where there is incentive money available we’ll be looking to develop programs,” he told Banker & Tradesman.
Meanwhile, Butler said this latest partnership is part of Radius Bank’s overall strategic plan to position itself as a largely digital bank.
“For our purposes, we would say we have three really significant relationships with fintech companies that we think are really important to our strategy. I would say there are probably two or three more we’d like to develop,” he said. “We’re being very cautious … but at the same time, we’re building long term sustainable relationships.”
