Many credit card companies today offer rewards to customers for frequent spending. But now, there’s a new Lexington “non-bank lender” that wants to reward you with a line of interest-free, fee-free credit, just by spending as you normally would.
It’s called Float Money. You build a “float line,” or line of credit, by spending through the Float Money shopping network. The network includes dozens of familiar stores in central Kentucky such as Sears, Meijer, Lowe’s, CVS Pharmacy, Gap, Speedway and many more.
“We are introducing a new form of consumer credit. It’s a safer alternative to credit cards and other high-rate loans. It is an interest-free line of credit powered by consumer spending,” explained Shane Hadden, founder of Float Money. Hadden is a Lexington native who grew up in Danville, Ky. He later worked at various financial firms in New York City and Connecticut before returning to Kentucky to found Float Money.
Every time you shop at a Float store, you earn what’s called Float credit, which establishes your Float line or borrowing capacity.
“For example, if you join Float and move your $500 a month grocery shopping to us, then you automatically have a $500 line of credit after you make the first purchase,” Hadden explained.
You can shop the network of stores online or shop in those stores using the store’s gift cards purchased through Float Money. You can also benefit from shopping deals that Float offers on a regular basis, including coupons and exclusive discounts.
Your spending is obviously a valuable asset to merchants. Float helps you leverage that asset to your advantage. Hadden said the average American family spends more than $1,000 per month on routine items that can be purchased through Float. This amount of shopping alone could support a $5,000 interest-free credit line at Float. Technically, the minimum loan amount is $200, but very frequent users could conceivably reach the maximum borrowing amount of $25,000.
How does Float Money make its money? Float earns commissions from merchants in the program by bringing customers to them. Float uses some of that money to provide the no-cost loans.
“In effect, the merchant is paying the interest and fees for the consumer,” said Hadden. “Everybody wins. Merchants love it. Customers love it. This is the first safe alternative to credit cards.”
Libby Ludwig is a Float Money member. She works for Apprisen, a nonprofit financial counseling agency in Lexington.
“I heard about this through my work. They came and spoke at a staff meeting,” she recalled. “I was impressed with the company and what they try to do. I wanted to be a part of it.”
She said it only took about five minutes to register online. Ludwig uses the gift cards she purchases through Float at Meijer, Amazon and K-Mart. She has been doing this for about a month.
The Ludwigs use money they would ordinarily spend at their favorite stores but instead of buying directly from the store using their own cash, checks or debit cards, they send money to Float ahead of time and Float sends them a gift card for that store. There’s no cost to do it. Float gets credit from the store; the member gets loan credit from Float.
Using Float does require a little advanced planning, which could be achieved by making the routine part of your regular family spending plan.
“There’s a little bit of lag from the time I mail Float my check and they mail me the card that I want to use,” Ludwig said.
“I also like it because it makes me have to budget,” Ludwig continued. “If I get a Meijer card for $200 to last me for two weeks, I need to plan my grocery shopping and meals in order to keep within my budget.”
Ludwig feels Float Money is a great line of credit because it charges zero-percent interest.
“It’s great for people who don’t have any credit or who want to start building credit. We also appreciate having an extra savings net for an emergency home repair or auto repair or something we’re not expecting.”
Hadden said half of the people in the country live paycheck to paycheck. He said he doesn’t want to see them over-borrow.
“That’s an expense for us,” he said. “But it’s natural that at some time something will happen, and you will need to borrow.”
Float Money has been in test mode for months. It’s now active in Kentucky, Ohio and Massachusetts and is growing.
“We have 360 registered users from this testing phase and we gave them all a line of credit,” Hadden said.
When asked whether Float Money is part of the new wave of consumer financial strategies in this age of online banking and debit and gift cards instead of cash, Hadden was certain. “Absolutely,” he said. “Consumers have much more power than ever. We help consumers unlock that to get the financial services they deserve and need.”