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When Eric Wei and Will Kim set out to create a credit card for creators and influencers, they did so because traditional banks and card issuers were often reluctant to give credit cards or extend credit to influencers.
Many of these Twitch streamers, TikTokers, Substack writers and Instagrammers had cash in hand, high incomes and millions of followers. However, many also had bad credit, little to no credit history or revenue that changed monthly and would come from different sources. This made it hard for them to qualify for a credit card or for lines of credit from traditional banks or card issuers.
"The whole reason we exist is we see this entire new class of businesses [who] found a way to make a living from content online just get treated really poorly by banks. Not just on credit cards, [but] on mortgages, on accounts, on taxes, on payments…" Wei said.
Introduce the Karat Black Card: a no-annual fee, charge card for social media influencers. A charge card is a card that requires you to pay your balance in full each month and doesn't allow you to revolve your balance. The card, which was introduced in June 2020, already has many popular influencers endorsing and using it, including chess Twitch streamer Alexandra Botez, lifestyle YouTuber Kelly Stamps and YouTube gamer TheRussianBadger.
When you apply for the card, Karat doesn't just assess the financials that a traditional bank or issuer would look at, such as your cash on hand and your income, but they also look at your social media stats. Depending on what platform you're on, they'll look at different types of data. If you're a YouTuber, they'll look at subscribers and ad share revenue. If you're an Instagram influencer, they'll look at followers, engagement rates and sponsorship deals.
While Wei was unable to share the specific criteria for approval, he says that there are general follower counts that Karat looks at for applicants. YouTubers should generally have at least 100,000 followers; Instagrammers should have at least 125,000 followers; and TikTokers should have a whopping 2.5 million followers. Wei estimates that the average cardholder has an annual income of more than $500,000.
Lenny Rachitsky, a Substack writer with 68,000 subscribers who covers the workplace, had applied for the card because of his growing newsletter business. After initially getting rejected for the Brex Card, a card for small business and start-up owners, a friend recommended the Karat Black Card to him. He applied and got approved.
"They [traditional banks] don't look at the value of the audience, the growth potential and the unique way these people's business works," Rachitsky said.
The card was designed to be customizable to the needs of the creator using it. There is no set reward system. Instead, creators determine which three spending categories are the highest for them and receive between 3% to 5% cashback in those categories.
Wei explains that a travel blogger might prioritize spending on food and flights while a YouTube gamer might spend more on computer equipment and technology. The card also comes with a welcome offer of $250 which is received in the form of a statement credit towards any future purchases.
The Karat Black Card application requirements and terms are shrouded in some mystery. You'll have to apply to be on the waitlist, the requirements for approval aren't set in stone and you won't find out the terms on the card until you apply.
For now, Karat has cornered a part of the market that has often been misunderstood and unacknowledged by banks and card issuers.
"The creator economy is booming, there are millions of creators driving billions of dollars in revenue, they're an underserved business type, [and] we get them," Wei said.