From the start, I pointed out that the math behind the USBank Smarty Card didn’t work—except for extremely high spenders. The cashback model was designed around offering a lower savings rate compared to top HYSA's at other institutions, combined with interchange revenue. USBank likely believed they could make the card profitable by offsetting rewards with the difference between their lower savings rate and top HYSA rates, plus interchange fees.
However, the issue was that the average cardholder’s spending exceeded what could be covered within that bucket. Instead of breaking even through these offsets, USBank had to dip into profits from interest-bearing accounts to fund rewards, making the model unsustainable.
The card was ultimately structured to drive higher cash deposits and increase lending power via fractional reserve banking. It was particularly appealing to the "average Joe"—someone with significant savings, investments, or retirement accounts but not necessarily a high salary. However, for most users who couldn't put significant spending on the card, they were better off keeping their funds in cash-like securities such as bonds, CDs, or TIPS. Without high spending levels, they would never break even due to the opportunity cost of keeping cash at USBank rather than in higher-yielding alternatives.
A spending cap could have helped mitigate losses and make the program viable. While USBank likely anticipated some costs, they underestimated the impact of high spenders exceeding their profitability threshold, ultimately making the model unworkable. The kicker is they will loose the deposits and hence damange lending amounts.
That is my take on the intended purpose of this offering. My opinion and a $1 will buy you a cup of coffee.
>The cashback model was designed around offering a lower savings rate compared to top HYSA's at other institutions,
This doesn't make a lot of sense because they allow self directed brokerages to count towards the 100k requirement and those can be invested anywhere. My 100k is in the same Vanguard ETF it was in when it was at Vanguard.
Maybe they will update it to only count actual banking products in a reach for profitability. But the initial structure doesn't work this way at all.
Ok so here is the reddit rumor that was posted yesterday, so note the date and of course its a rumor. Yikes if true though.
*This is not confirmed, but came from a friend of someone who works at USBANK*
Take it as it may happen, may not:
Smartly VISA update due to roll out April 14th, 2025:
2% still unlimited
Any earning bonus now capped at 10k/spend per statement cycle.
2.5% is now 10k+ (up from 5k)
3% still 50k
4% still 100k
Bonus % now excludes: Educational/school, gift cards, insurance, taxes, business to business transactions, and 3rd party bill payments.
Apparently for NEW card members after April 14th (Existing will be grandfathered in; for how long who knows?)
ONLY checking account balances count now towards the 10k/50k/100k requirement.
Savings balances and investment balances do not count after 4/14 for new cardmembers.
I knew this card would get nerfed. Same as AOD, just clearly unsustainable. I wonder what USB was thinking to even release this.
There's a new update rumor
U.S. Bank Smartly Changes After April 14th: Exclusions on 4% Earn (Tax, etc) & Brokerage Funds Exclusion (For New Signups)
- Bonus earn rate now excludes: Educational/school, gift cards, insurance, taxes, business-to-business transactions, and third-party bill payments.
- Any earning bonus is now capped at 10k/spend per statement cycle.
- For NEW cardmembers who sign up after April 14th: only checking account balances will count towards the 10k/50k/100k requirement. Savings balances and investment balances do not count.
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I'm having a hard time believing that they would require the money to be in checking. There is not a person on earth who would put $100,000 in checking just to get 4% CB on their spending.
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