The news: SoFi debuted the SoFi Smart Card, a charge card aimed at rewarding consumers in essential categories, per a press release.

• The card has no annual fee but is only available for SoFi Plus members ($10 per month member fee) and offers the following benefits:
• 5% unlimited cash back at grocery stores, including delivery
• Up to 4.3% APY on SoFi Savings balances
• Spending control with a dynamic credit limit adjusted on the cardholders’ checking and savings balances
• $0 fraud liability backed by Mastercard
• Fee-free access to over 55,000 ATMs globally
• Seamless money transfer options through peer-to-peer (P2P) payments, Zelle, bill pay, cross- border payments, and mobile check deposit

Why this matters: Affordability tops consumers’ chief concerns. Prices surged in four of the six main grocery groups tracked by the Bureau of Labor Statistic’s Consumer Price Index (CPI) in September from August: Meat, fish, and poultry (up 0.3%), non-alcoholic beverages (up 0.7%), other food at home (up 0.5%) and cereals and bakery products (up 0.7%), adding strain to US households. 

The Smart Card’s cash back for groceries reward perks where average consumers frequently spend to offer meaningful savings.

Play for Gen Z: The SoFi Smart Card boasts lower barriers to entry with no direct annual fee and no hard credit pull for applicants, appealing to Gen Z consumers who want to control costs and protect their credit scores. The spending controls can help prevent young consumers who are dubious of revolving credit from trading down to debit cards. 

By requiring SoFi Plus for card access, SoFi is also making an ecosystem play. The Smart Card’s enticing rewards and features could boost engagement with SoFi’s other banking products, like personal loans or mortgages, as this demographic ages into new financial life milestones or wealth management needs.

Our take: SoFi’s latest product meets the needs of everyday consumers while offering competitive cash back in a necessary category. 

Issuers should expand rewards on essential categories like groceries and gas to stop middle- and working-class cardholders from switching to neobank competitors—offering card products that assist with affordability.