Unbundling the $700Bn Credit Card Market

I carry two primary credit cards in my wallet. If I don’t pay off my monthly balance I incur interest rates of 13.5% and 16.2%. But I also have an unsecured credit line from Wells Fargo that is only 9.25% APR. The underlying credit risk of all three credit products is exactly the same, and yet there is a massive gap in APRs. Sadly, this phenomenon is not unique to me. Data from the Consumer Finance Protection Bureau indicates that credit card banks typically overcharge consumers by 10-50% relative to their true credit risk.

One year ago Jason Brown and Jasper Platz identified this market inefficiency and set out to solve the problem. What they came to realize is that banks do this out of necessity. Many credit card customers use their credit card purely as a means of payment, not as a credit line. Since banks don’t generate interest revenue from these customers, banks must subsidize the cost of acquiring and servicing those customers through artificially high interest rates applied to customers carrying balances. Ultimately, the banks get away with it because they can. They bury high APRs in the fine print and lure in consumers with promises of rewards and cash back.

Today we are announcing Shasta’s most recent investment, leading the $15M series A financing for Tally, a financial technology company solving this problem.

Equipped with their unique and fundamental insight about the tallyt-redcredit card industry, Jason and Jasper set out to unbundle the credit card. The result is Tally. Pay and earn rewards with your existing credit cards. But use Tally to get the lower APR that you deserve. Use Tally to automatically manage multiple monthly bills and never again incur a late payment fee. Use Tally to maximize savings by intelligently optimizing grace periods and introductory rates. Set it, forget it, and save money.

The stakes are huge. Every year consumers lose billions to credit card companies through artificially high interest rates and late fees. More than $250 billion of the $700 billion credit card market is held by prime borrowers who carry balances, precisely the target customer that Tally can help most. Even a small dent will enable Tally to become a very large company.

But none of this matters without a phenomenal team making it happen. Jason and Jasper are entrepreneurial magnets. Their clear vision and charisma gives them unfair access to talent, press, partnerships and capital. They’ve built a world-class team of people like Jason Huynh, a seven-year veteran of Capital One now leading Tally’s credit underwriting. They’ve brought on best-in-class developers and designers that have built Tally’s simple, yet elegant product. And throughout their careers they have demonstrated the unwavering persistence and commitment common among the world’s best entrepreneurs.

Powerful vision for saving consumers billions of dollars. Intuitive and beautiful product experience. Massive market. Remarkable team. We couldn’t be more excited about investing and joining the team on their mission.

Unbundling the $700Bn Credit Card Market

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