The ride-sharing company is launching a new card that gives 4% back on dining — but there are big downsides too
Eat your hearts out, America.
On Wednesday, ride-sharing company Uber and financial firm Barclay announced a brand-new Visa credit card — and experts say it could be a savvy bet for those who love to eat out, in particular.
That’s because it offers 4% back on restaurants, takeout and bars, including UberEATS. This is “an unprecedented amount of points that can be earned for dining in the credit card space,” says RewardExpert’s CEO and co-founder, Roman Shteyn.
The card will also offer 3% back on airfare, hotels and vacation home rentals; and 2% back on many online purchases including Uber, online shopping, video and music streaming services.
And “one of the more interesting and unique perks that the card offers is free mobile phone insurance of up to $600 for damage and theft when the card is used to pay your monthly cellphone bill,” says Shteyn. “Apple will soon open up pre-orders for its iPhoneX, which is anticipated to retail between $1,000 – $1,300. With these numbers looking more like prices for a laptop versus a cell phone, and with Apple Care costing around $200 for damage protection, the insurance offered through this card with again, no annual fee, could be a viable alternative for protecting a pricey new iPhone.”
The card is “clearly another case of credit card issuers going hard after millennials with money,” notes Matt Schulz, CreditCards.com’s senior industry analyst. And it’s a way for Uber to get consumers using its services: Indeed, the company tells Moneyish that “points can be redeemed for Uber rides & UberEATS through a single click in the Uber app” so they’re clearly hoping you go to the app frequently. Though, to be fair, you can also get cash back and gift cards within the Barclay app.
Of course, there are downsides to this card. Interest rates can hit 24.74%, which can make those rewards effectively worth next to nothing. And “when it comes to redemption it can be quite limited,” Shteyn points out.
One example he cites: Many of “the points you earn with this card can only be redeemed for Uber ride credits, cash back, and gift cards, and at a very limited rate of one cent per point. Many rewards cards will offer a higher point value for redemptions made through the card’s portal, as is seen with the Chase Sapphire Preferred offering 1.25 cents per point through its portal.” And travel redemptions are limited too, he notes: “The points earned on travel transactions with the Uber card are points that could be better earned – and spent – on a travel rewards card.”
Even seemingly decent perks, like the 2% back on online purchases (which also comes with a $50 credit for online subscription services), may not be all they’re cracked up to be, says Shteyn. “There are plenty of cards that offer a flat 2% back on all purchases, so it should be taken with a grain of salt. For example, the Capital One Venture card offer 2X on all purchases, and while it comes with an annual fee starting in the second year, those points can be redeemed for many more items at a higher cents-per-point rate, including for award travel,” he explains.
Bottom line: “For a no-annual-fee card, the Uber Visa Card offers a number of commendable point-earning opportunities and some very progressive perks, like its mobile phone insurance benefit. If you use Uber frequently, this card can certainly help you cut back on your fares,” says Shteyn.
But, for many consumers, a simple rewards card that offers 2% back on everything may be a better bet, says Schulz. “The majority of Americans just want a card that gives them good rewards that they don’t have to think about or work hard to redeem,” he explains.
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