The credit card’s rewards points are structured to incentivize borrowers to choose Rocket Mortgage when financing their home.

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A new rewards card from Rocket Companies incentivizes first-time homebuyers to choose Rocket Mortgage when financing their home, letting them earn rewards points on credit card purchases that can be redeemed to cover up to $8,000 in down payment and closing costs.

Haroon Mokhtarzada

“Every day, consumers tap their credit card to refill their gas tank, stock up on groceries or pay for any number of other purchases,” said Rocket Money CEO Haroon Mokhtarzada in a statement Tuesday. “Now, those transactions can unlock the dream of homeownership for millions of consumers across the country.”

If there’s a catch to the new Rocket Visa Signature Card, it’s not just the high interest rates on balances — a common feature of rewards cards. According to the card’s terms, users will pay an annual percentage rate (APR) of at least 20.49 percent if they carry a balance and up to 30.49 percent depending on their creditworthiness.

But Rocket Visa Signature Card customers will also find that their rewards points are worth considerably less if they ultimately decide to finance their home purchase with a lender other than Rocket Mortgage.

According to the new credit card’s website, customers who redeem points toward their down payment and closing costs on a Rocket Mortgage loan will earn the equivalent of 5 percent cash back. If they’re already making payments on a home loan serviced by Rocket Mortgage, rewards card customers can earn the equivalent of 2 percent cash back when redeeming their points to pay down their mortgage balance (having a mortgage that’s serviced by Rocket also relieves them from having to pay the card’s $95 annual fee).

But if Rocket Visa Signature Card customers want to use their rewards points to pay down their credit card balance, they’ll receive a statement credit equivalent to 1.25 percent cash back.

“The Rocket Visa Signature Card is positioned to bring more homebuyers to Rocket and strengthen Rocket Mortgage’s already strong brand loyalty,” the company said in announcing the launch of the new card. Rocket Mortgage enjoyed a 93 percent client retention rate in 2022, the company said, “a rate unmatched among mortgage companies.”

Rocket’s fintech strategy

The new Rocket Visa Signature Card — which Rocket CEO Jay Farner hinted at in February on the company’s fourth-quarter earnings call — is part of Rocket Companies’ strategy to grow its business by repositioning itself as a fintech platform capable of unlocking the “lifetime value of the client” by cross-marketing products and services.

Source: Rocket Companies February 2023 investor presentation

While providing home loans through Rocket Mortgage is Rocket’s biggest business, it also helps consumers line up real estate services, personal loans, used cars and rooftop solar systems through subsidiaries Rocket Homes, Rocket Loans, Rocket Auto and Rocket Solar.

At the heart of the fintech strategy was Rocket’s 2021 acquisition of Truebill, a personal finance app founded by Mokhtarzada that tracks spending and helps users budget and boost their credit scores.

After acquiring Truebill for $1.27 billion, Rocket rebranded the company Rocket Money in August and connected the personal finance app to the rest of the Rocket platform, allowing Rocket to market mortgages and other services to users.

Last fall, Rocket launched a loyalty program, Rocket Rewards, aimed at generating more business for Rocket Mortgage by allowing prospective homebuyers to earn reward points by reading educational articles, watching videos, or using a mortgage calculator to save up to $10,000 on their closing costs.

While Rocket posted a $493 million fourth-quarter loss as rising interest rates crushed its profitable mortgage refinancing business, executives reassured investors in February that the company is poised to make more loans to homebuyers.

“Rocket Money provides us with a distinct competitive advantage by acquiring clients for less than $100 per client,” CFO Brian Brown said on a Feb. 28 call with investment analysts. “In contrast, the mortgage industry acquires a closed client for thousands of dollars. We see tremendous opportunity to lower our client acquisition costs by acquiring clients through Rocket Money.”

On the same call, Farner noted that by the end of 2022, Rocket was managing 25.4 million client accounts with Rocket Money driving “a significant amount” of growth. Farner said that since launching in October, the Rocket Rewards loyalty program had enrolled more than 1 million clients who had redeemed a total of $600,000 in points to lower their closing costs when taking out mortgages with Rocket.

“Dan Gilbert used to say, you’ve got to hang around the hoop,” Farner said. “We’ve got to be present with that consumer as they go through the three to four to five months to find the right home. And all of the programs that we’ve built allow us to hang around the hoop, helping that client until they’re ready to buy.”

While Rocket “certainly can help someone who needs to sell their home and buy a new one — and we’ve got programs coming that will even make that better — our focus through Rocket Money, in particular, is to get to the person who is the first-time homebuyer,” Farner said.

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Email Matt Carter

homebuying | lenders
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