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LendingTree launches credit card with installment payment model

LendingTree, which operates a financial services marketplace for consumer loans, is branching out by offering a branded credit card that is repaid at a fixed rate, like an installment loan. 

The LendingTree Win Visa card relies on San Francisco-based Upgrade's model providing users with a fixed rate on purchases that are paid off in equal installments over 24, 36 or 60 months, structured like a personal loan. The card is issued by Sutton Bank, with banking services and credit lines provided by Cross River Bank, the release said.

Charlotte, North Carolina-based LendingTree will offer the credit card separately from the mortgage, auto and other consumer loans displayed on its online loan marketplace, according to a press release Tuesday.

The move comes after LendingTree announced its fourth consecutive quarter of losses.

Renaud Laplanche, founder of Upgrade and former CEO of Lending Club.
Fixed-rate installment-based credit card loans could protect consumers against rising interest rates, according to Upgrade CEO Renaud Laplanche.

Net income during the quarter ended Dec. 31, 2022, was down sharply to $10.4 million from $48.4 million a year earlier. Revenue over the same period declined 22%, to $202 million, from $259 million during the fourth quarter of 2021. 

LendingTree executives hope that the company's existing audience will provide a fast track to signing up new users for the Upgrade card.

"Upgrade will manage all of the balance sheet risk and the credit scoring, and we'll get a substantial bounty for every card that we originate through our platform, as well as an ongoing share of the interchange," said Trent Ziegler, LendingTree's chief financial officer, during a Monday conference call with analysts to discuss earnings. 

The card will provide 2% cash-back rewards on all purchases for LendingTree members who enroll in automatic monthly payments and log into their LendingTree account once a month, according to a Monday press release. Other users will get 1% cash back.

The LendingTree partnership marks Upgrade's seventh credit card program rolled out since 2019 and its first with a third party, according to Renaud Laplanche, Upgrade's founder and CEO. Laplanche was the founder and CEO of rival online loan marketplace LendingClub.

The timing of LendingTree's new credit card could be beneficial for consumers looking to manage spending amid rising inflation and interest rates, Laplanche said via email.

"Because Upgrade's card balances accrue a fixed interest rate, customers are better protected against rising rates than average [card] customers," he said.

LendingTree initially is marketing the new card to its existing 24.8 million MyLendingTree members. Those who have joined the waitlist may apply later.

LendingTree also said it will integrate the Win card with its TreeQual product, which pre-approves customers for loans.

Renaud Laplanche, founder and CEO, Upgrade
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At least one analyst is skeptical about long-term potential demand for the LendingTree-Upgrade card. 

"This pairing tries to shift the typical revolving credit account into a loan product, with equal payments, but consumers might find that the ability to repay on a typical credit card loan format offers more relief when budgets are under stress," said Brian Riley, co-head of payments research at Javelin Strategy & Research.

The need for users to log in monthly to LendingTree to earn the maximum cash-back rewards could be a challenge, too.

"It might start off with a bang but may soon become forgotten," Riley said. 

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