ATLANTA—Greenlight, a fintech that offers bank accounts to kids, has become the latest to offer a credit card. The company already offers a debit card to kids.
The Greenlight-branded card, offered through Mastercard, offers up to 3% unlimited cash back on all purchases and gives parents the option to automatically invest those cash rewards in stocks and ETFs to spend on family-related expenses, co-founder and CEO Tim Sheehan told TechCrunch.
Parents must opt into the automatic investment feature, and if they don’t want their funds invested in the ETFs Greenlight pre-determines are relatively safe, they can also choose to invest that cash in other ways through Greenlight’s investment app or opt for the cash to go directly to their bank account, Sheehan said.
“It seems the card’s purpose of helping parents save for their children’s education is reflected in the way it’s being marketed, but ultimately, it functions very similarly to any other credit card that offers cash back to users,” TechCrunch explained.
The Differentiator
Its differentiator, Sheehan told TechCrunch, is in its ability to allow parents to invest those rewards automatically rather than having to do so manually if they choose that option.
“Plenty of investment platforms, including Bank of America, Fidelity and Charles Schwab, offer credit cards that automatically invest cash rewards into the market, but Greenlight hopes its focus on families and their needs will help it stand out,” TechCrunch said.
Sheehan said the company considered designing the card so cash back accrued into a 529 plan, a tax-advantaged educational savings account parents can open on behalf of their children. Ultimately, he said, Greenlight decided against that option.
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