Greenlight, the Atlanta, Georgia-based fintech company that offers child-friendly bank accounts for parents, is launching a credit card.
The Greenlight-branded card, courtesy of Mastercard, offers up to 3% unlimited cash back on all purchases and gives parents the ability to automatically invest those cash rewards in spendable mutual funds and ETFs for family-related expenses, co-founder and CEO Tim Sheehan told TechCrunch.
Parents should opt for the auto-invest feature, and if they don’t want their funds invested in ETFs, Greenlight’s predeterminations are relatively safe, they can also choose to invest that money in another way via Greenlight’s investment app or opt for the silver. to directly access 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 marketed, but at the end of the day, it works very similarly to any other credit card. which offers cashback to users. Its differentiator, Sheehan said, is its ability to allow parents to invest these rewards automatically rather than having to do so manually if they choose that option. Many investment platforms, including Bank of America, Fidelity and Charles Schwab, offer credit cards that automatically invest cash rewards in the marketplace, but Greenlight hopes the focus on families and their needs will help. to stand out.
Sheehan said the company plans to design the card so the cash back accumulates in a 529 plan, a tax-advantaged college savings account that parents can open in their children’s names. Ultimately, he said, Greenlight decided against this option.
“We looked at 529, and we just decided, after talking to really a lot of parents, that they basically liked the flexibility over the little tax advantage of 529. Basically, they said, I’d rather have the flexibility and not be penalized to use the money for anything my family needs,” Sheehan said.
The company recorded more than $100 million in annual recurring revenue (ARR) in 2021 and passed the 5 million mark in terms of the number of parents and children on the app, Sheehan said. It raised $260 million in a Series D funding round led by a16z in April last year, which nearly doubled its previous valuation at $2.3 billion.