M1 Finance; Rachel Mendelson/Insider
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- The new M1 Owners Rewards Card is free for M1 Plus members, but there’s a waiting list to apply.
- By owning fractional shares of a company with a bonus payout, you can qualify for more cash back.
- Companies with bonus incentives include brands like Netflix, Spotify, Target, Delta, and Nike.
- Read Insider’s guide to the best rewards credit cards.
Today, M1 Finance announced the details of a new rewards credit card that replaces points to spend with stocks to hold.
It’s called the M1 Owners Rewards Card, and it comes with some eye-popping bonus payouts: 10% cash back on your Netflix subscription, 5% back on Delta Air Lines purchases, 5% back at Starbucks, and 2.5% at Amazon and Target. Other names with bonus incentives include Spotify, Nike, Doordash, and AMC.
All other purchases earn 1.5% cash back, and the card comes with standard Visa Signature benefits.
Here’s what to know about the new M1 Owners Rewards Card to help you decide if it’s a good fit for you.
M1 Owners Rewards Card details
Before you decide on the M1 Owners Rewards Card, there are a few important caveats to consider:
You have to join a waitlist
The card’s launch involves handing over your data to join a waitlist for the application. The move mimics a lot of other alternative rewards cards as they work to build buzz around their new offerings. I tend to find the need to give away my email address a bit frustrating, but the approach seems to be working: M1 says they already have 45,000 people on the waitlist.
You have to be an active member of M1 Plus to apply
M1 offers some of the services of a regular bank and brokerage: an investing platform, loans, and a checking account. A standard account is free. M1 Plus is the company’s higher-tier offering that comes with lower margin lending rates and higher rewards rates for other products like its checking account.
Read more: M1 Finance review: Investing app for automated and DIY trading
Right now, the first year of M1 Plus is free for new users, but the program comes with a $125 annual fee after the first 12 months. The Owners Rewards Card will be included in that $125 price tag. If a user decides to downgrade from the M1 Plus plan, there is a $95 annual fee. So, think of it this way: No annual fee for the first year and $125 after that, assuming you stick with the membership.
You have to own the stock to earn the bonus
The “Owners” branding of the card is a key point of differentiation. Individuals who own at least 1 cent of a fractional share of a stock on the day of a purchase are eligible for the boosted rewards. For example, if you own 10 cents of Netflix in an eligible M1 invest account and you use the card to pay for your monthly subscription, you will automatically earn 10% cash back on the transaction.
“This is not click-to-activate, which is what Chase Offers is,” Ben Reid, general manager of credit cards at M1 Finance, told Insider. “This is own-to-activate.”
All cash back is automatically deposited into your investment portfolio. You have the option to withdraw it, too.
Playing the long game
Over the past year, plenty of people decided to take an ownership in the stock market. A survey from Charles Schwab showed that 15% of US retail investors started buying stocks in 2020. Plenty of that action focused on GameStop and the Wall Street Bets conversations lighting up Reddit. Reid, though, was quick to clarify that M1’s aim is to encourage its users to look well beyond the day-to-day price swings, pointing out that the platform is “not like Robinhood.”
“This is not a day trading platform,” he said. “It’s for long-term investing. The ethos of the company is that the right way to build your long-term financial health is by owning stakes in companies for long periods of time.”
Read more: 7 investing apps to try if you don’t want to use Robinhood
More companies coming to the bonus structure
To select the cast of companies with a bonus payout structure, Reid said that the company looked at the “most-held consumer-facing stocks on M1.”
“That was the starting point so that we weren’t featuring an obscure smaller consumer brand that no one held,” he said. “The idea is that [you should] get the recognition and perks for being an owner of these marquee brands.”
He pointed out, too, that the name of the stock is only part of the story of the extra earning potential. For example, if you hold Amazon stock, you’ll earn 2.5% cash back at Amazon.com, Whole Foods, Zappos, and other brands owned by Amazon where you pay with the card.
Read more: The best credit cards for Amazon purchases
I found the Delta Air Lines inclusion especially compelling. If Delta’s stock rises, investing the 5% cash back over a decade can be a lot more meaningful than accruing miles to use in six months. While Reid could not disclose any specific names of other bonus opportunities that the company plans to announce later this fall, he did say that “additional airline and accommodation partners” will be added to the list.
Should you sign up for the M1 Owners Rewards waitlist?
The payments landscape is becoming increasingly crowded with alternatives to points and miles. The
Three crypto cards have debuted this year. Unifimoney’s new crypto, equities and gold offering is coming soon. I even tried Stash’s prepaid debit card to get a sense of the new frontier.
Read more: The best credit cards to turn rewards from everyday spending into investments
So while M1 isn’t the first card to focus on investing instead of spending your rewards, the elevated bonus opportunities will position it at the front of the race. From picking up household items at Target to paying for entertainment services with Netflix to buying flights with Delta, this card has a bonus structure that covers nearly every spending category. The plans to add more companies will sweeten the deal, too.
Ultimately, the decision to join the waitlist comes down to whether M1’s platform is right for you. Will you take advantage of all the services to justify the $125 annual fee for M1 Plus? That will require reexamining your existing banking portfolio – where you have a checking account, where you invest, and where you turn to borrow money – to make the most of your potential rewards.
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