Elon Musk's X Money: 6% APY, 3% Cash Back on Everything

[00:00] with reminder big coupon expiration at meetkevin.com and hustack.com. Elon Musk just destroyed banking. Literally, he just took the benefits of some of the greatest financial banking platforms,

[00:14] like free ATM withdrawals, free checks, free wires, no international wire fees. Hey, you want cash back? Forget 2% cash back. Forget complicated rewards.

[00:26] How about 3% cash back on everything unlimited? And you know what? While we're at it, why don't we just pay this 6% on a money market fund? Yeah, we'll top it off for you.

[00:38] We'll take the L on it. Yeah, that's what Elon is potentially launching with X money, which, if you remember, X, the Twitter of the previous day,

[00:51] was acquired by SpaceX before the IPO, And SpaceX just raised $75 billion in IPO, an extra $10 billion in the green shoe over allotment after the IPO,

[01:05] and then refinanced about $25 billion of debt they have coming due next year to a longer term, meaning they basically have $85 billion to do whatever they want.

[01:18] And they basically just chose war with Robinhood. Now, you know how Robinhood has the gold card? We're going to go through some of the X-Money details in just a moment. But you know the Robinhood Gold Card has, you know, this fancy, heavy, metallic card,

[01:34] and you get 3% cash back, although they technically give it to you in rewards, and some people are frustrated by the rewards, other people like the rewards, whatever. But the reason, in my opinion, that Robinhood actually gave the Robinhood Gold Card

[01:50] is because the Robinhood Gold Card loses Robinhood money. See, just in provision for credit losses, which is just part of the money that they actually spend on the card,

[02:03] Robinhood blows about $31 million per year just on credit losses for having a credit card exposure. Their net interest margin is about, here we go, net interest revenues, revenues, $32 million.

[02:20] So they're bringing in about $32 million on credit card revenues. They're spending 31 on losses related to just like charge-offs related to the credit card. But now you've got to factor in the marketing expenses, the expenses related to 3% cash back, and otherwise.

[02:39] Now, maybe we're not seeing everything, but the point is, at best for Robinhood, this is a break-even. It's likely a money loser. And what most companies do is they have some kind of money loser to attract people to the business or platform,

[02:55] so then they can make money off of where they really want to make money, such as margin, lending, or in the case of Robinhood, they make a lot of money selling you options. And they used to make a lot of money selling you crypto, but crypto revenues have nearly plummeted in half.

[03:12] Why? Well, because obviously it's a four-year cycle. I'm sure it has nothing to do with the scam of Scratch, STRC, MicroStrategy's, how should I say, debt relief valve.

[03:26] But we'll cover that again in a different video. What's more important is what the details of X money are. So let's get into what some of these are. First things first, here's some coverage.

[03:40] we've got 6% APY on all cash deposited into X money. No limit. This is a money loser for X, but they've got plenty of money. So what a great way to sort of redistribute some of that IPO wealth

[03:54] to people who want to make a 6% yield on their cash. Now, obviously, that's not like it's an investment. It not like that an investment that hitting 6 and upside potential in the investment but it also doesn have downside potential right Up to million of aggregate FDIC insurance coverage This is basically a fancy way of you know

[04:14] what companies do is they'll connect with like a Green Dot Bank or Cross River, and these banks coordinate with a bunch of different banks for you because usually you only get up to $250,000 in FDIC

[04:26] or Federal Deposit Insurance Corporation guarantees that your money is safe. That's been such a low limit, and frankly, during the 2023 banking crisis, it was de facto expanded to larger amounts thanks to the Silicon Valley bank failure.

[04:43] But no federal reserve wants to see banks fail. But that's cool. Then we've got here unlimited 3% cashback on all card purchases. there's an asterisk because they don't want you buying other coins or, like, money currencies,

[04:59] like lottery tickets, precious stones, medals, whatever, jewelry, watches, I guess, are also excluded. I'm sure that was interesting, but I guess it's considered more of, like, gold currency, if you will. But anyway, physical metal card, card will be used anywhere Visa is accepted.

[05:14] It does look like you're setting this up as a debit card rather than a credit card, Which is interesting just because I feel like that, you know, people would like to have a credit card that, you know, they pay off every month, but they're probably just not set up for that infrastructure yet because that way they can build their, you know, people can build their credit.

[05:32] X probably isn't there yet. Although by doing it this way, they're basically making it a bank account. And it doesn't have to be a bank account itself because, you know, X doesn't have a banking charter.

[05:44] And frankly, you don't want SpaceX to have a banking charter. The best bank is the bank you could use, not the bank you own, because the ownership requirements in banks are insane in terms of the limits of who can own a bank and what you can do with that ownership.

[05:59] Banking charters are crazy. So, really, it's a fintech platform. It's kind of like a mercury bank on steroids, where what they're doing is they're taking some of these mercury bank benefits, free wires, free bill pays, free checks, free ATM withdrawals.

[06:15] withdrawals. You get reimbursed for fees in and out of network machines as well. SoFi does some of this stuff as well. And this is a direct competition to both of them.

[06:27] Mercury does a lot of this, where you go swipe your Mercury debit card at any ATM and they'll reimburse you the fees because they want you to be a loyal customer to the bank. And Mercury's not a bank either. It's a fintech. SoFi

[06:39] actually got their banking charter, but that's because they do so many student loans. You know, they get a little bit of a better spread now on the loans that they make. It's, you know, Visa's card network, so you have a zero liability policy,

[06:51] which, remember with debit cards, the money leaves your account first, so there's a little bit of a downside there, but, all right. You know, they're basically trying to promise, hey, if your card was sold, we'll get you your money back with a zero liability policy.

[07:05] Early direct deposit, this is, you know, some competing fintechs have been doing this as well. Get your paycheck two days early. and then also peer-to-peer payments. So they basically single-handedly destroyed,

[07:18] well, I shouldn't say destroyed because they're still going to be around, but they're trying to single-handedly destroy Mercury, SoFi, Robinhood, Zelle, Venmo, and PayPal all in one slope.

[07:30] Shout out to Sawyer for sending some of these posts over here, but here's some of the limits. No limit on X transfers. Wires you could do $75,000 per day or $250,000 per 30 days.

[07:43] That's a little limiting, so businesses aren't really going to be able to use this. But I don't think this is ready for businesses yet. I think this is really just being designed for individuals first. And I wouldn't be surprised if the gold checkmark crew, which we used to pay for.

[07:59] I didn't find the benefits were that great. So after paying for the gold checkmark for a year, and I was one of the first people to sign up for it. We let that one lapse and we throwing that money and reinvesting it into real estate But I wouldn be surprised if the gold checkmark crew at some point in the future with X money they end up getting massively increased wire limits

[08:20] And it's basically another way to sell the gold checkmark memberships, which are like a thousand bucks a month. You know, it's a lot. Anyway, card purchases up to $25K a day. You know, that's going to be great for most people,

[08:34] but business owners are going to be like, bro, come on. So, you know, some limits there for that higher spend user. But this is exactly what Robinhood does as well by gating the gold card 3% cash back

[08:48] to just individuals and only individuals that come off their wait list. That's being done on purpose, in my opinion, because they don't want the high spenders using these cards.

[09:00] They want this to attract crypto and options traders to the platform so Robinhood can make money. The wealthy people who are like, I don't do crypto, I don't do options,

[09:12] I'll buy and hold stocks, and I want 3% back. Like, yeah, no, we're not going to invite you. So it's kind of like it's rich discrimination. Anyway, they can handle it.

[09:25] So bank cards, no limit on the number of cards. Withdrawals for bank cards, 5K a day, 15K per 30 day. Checks, 25K per transaction. right now you earn 6% on all the cash you have in X money,

[09:39] no limit and no required holding period. This is actually a really great flag right here because Robinhood, if you send money to Robinhood and they give you like a deposit bonus, they'll take that deposit bonus back

[09:52] if you withdraw the money within a certain period of time, whether it's six months, a year, two years, whatever. This I thought was very interesting. X users discuss borrowing on margin from Robinhood

[10:05] at 4.2% interest to earn money on X money at 6%, effectively on $10 million, netting you $180,000 annually just for taking advantage of the quote-unquote carry trade.

[10:20] Yeah, as long as you don't get margin calls over at Robinhood. That's always the risk with a carry trade, the end of getting margin calls. They do have the X account that has not posted anything, yet, but it's called AtXMoney, so we'll be watching there for updates. And here they

[10:36] say, quote-unquote, Elon Musk's bank is live. But again, keep in mind, this is not a bank, it is a fintech. It just offers banking-style services. So, what do I think about this?

[10:48] It's actually pretty brilliant. First of all, these international banking sort of like transfer companies like Revolut, they have a high valuation. Look at this. Revolut, mostly used internationally.

[11:06] It's a London-based digital bank. I'm pretty sure it's a fintech. But they're currently valued at $75 billion on their last funding round. So the secondary sales are indicating the company could be valued at closer to $115 billion, and IPO targets are looking at $150

[11:23] to $200 billion. You could literally, if you have enough users, you know, because they have 70 million users, okay, well, like, if everyone on X all of a sudden uses X money, you know, let's find out here really quick. How many active users on X? Let's see. Yeah,

[11:40] look at this. Estimated 550 to 570 million active users with around 250 million daily active. Now, obviously, not all of them are going to use X money or trust X money. They're

[11:54] just going to go in there and kind of snoop for news or data or whatever. You know, which we have a little feed you could use as well, which we really enjoy in our Meet Kevin app. You can download that free in the app store. It's our alpha wire service, especially useful,

[12:09] I think for traders or investors But I mean that more users day one than Revolut has And Mercury Bank I want to say just raised money as well They not a bank either they a fintech but I want to say they just raised money at like a billion valuation

[12:25] This is $5.2 billion valuation, seriously. I'm a big fan of them, but I mean, I hate to say it, this is huge competition coming from Elon Musk in the fintech space, and you know, if you hold a candle to Revolut's

[12:38] valuation, you could have 10% of SpaceX's valuation end up being a fintech. kind of honestly brilliant, 40 checks, and what they're doing is they're buying customers.

[12:51] The 6% yield, it won't last forever. They won't put an expiration on it because they don't want people to feel like there's an end date. But 3% on a credit card and 6% is a way to buy customers.

[13:03] Now, I will say, would I use this over like a Chase Sapphire or a Capital One Venture card? Honestly, probably, because it's easier. It's much easier to just use one card

[13:17] and not have to juggle different categories, worry about hitting your category limits, worry about getting, how should I say, like confused or using the wrong card or not getting your bonus miles or whatever.

[13:31] Like out of the three big travel cards, Amex Platinum, Sapphire, and Venture, I make the argument that the Sapphire and the Venture X card are the best. I think Amex Platinum has honestly fallen behind with their rewards.

[13:46] Sapphire, as much as I hate J.P. Morgan, I personally hate them, but I'm going to give them credit. The Chase Sapphire Reserve card is really good. It's really expensive. So I personally use the Venture X card just because I use it as a daily driver to get 2% back because I do travel a lot.

[14:02] And these are redeemed one for one, so this isn't like sponsored or whatever. But I personally use this as my daily 2% driver. and then you get 5% to 10% back on hotels or flights that you book with their platform,

[14:15] a daily 3% driver would increase my cash back by 50%. And I use this card a lot. So I would personally prefer that. It would simplify my life.

[14:27] And honestly, I wouldn't even, depending on how much I traveled, I don't even know that I would bother trying to scrape the extra 2% to get to 5% on flights for the extra, I mean, maybe I'd go for the 10% on hotels, the travel platform, that stuff's

[14:43] still pretty juicy. But it does simplify your life a lot. And so I'm a big fan of simplification, one card pay. Now, given that it's a debit card, it's also, there's a benefit, you're spending money that

[14:55] you have rather than going into debt, which for a lot of folks is actually a benefit. Although I do think the credit building aspect, and eventually they'll come out with a credit card, I'm sure, is very useful and attractive to a lot of folks. So, really good job, honestly,

[15:10] here by Elon Musk. Really impressed, and I'm excited to see this fully launched. There is no way to right now request access to it. There's no, like, wait list or something you can sign up for. You just have to be an ex-premium user, and then you have to wait to get your

[15:25] invite, if you will, or it just sort of automatically appears in your ex-profile. So, stay tuned, but William Shatner apparently has been beta testing this since February and has been showing off his 6%, which I can't help but think about

[15:41] the William Shatner World of Warcraft ad. Shatner, you probably remember, if you know, you know, Shatner World of Warcraft. It was just when I thought I was out, they pulled me right back.

[15:55] Yeah. Go look it up yourself, because if I play this, I'll end up getting this video delisted, but yeah, I shouldn't do this. Anyway, thanks so much for watching. We'll see you next week.

[16:07] Goodbye. Good luck and impressive. I don't know how to advertise these things each other, too. I feel like nobody else knows about this. We'll try a little advertising and see how it goes. Congratulations, man. You have done so much. People love you. People look up to you.

[16:19] Kevin, pass that there. Finance, wireless, and YouTube up. Meet Kevin. Always great to get your take.