Zero Launches Debit-Like Credit Card, Raises $20M

Zero, a company that aims to modernize credit cards for the millennial generation, has raised $20 million in a Series A funding round, according to a report.

The round, which was led by New Enterprise Associates (NEA), brings the company’s total funding amount to $25 million, which includes both debt and equity funding.

Other investors include Nyca Partners, SignalFire, Eniac Ventures and others. Zero announced an $8.5 million raise in the fall of 2017, which was led by Eniac, and it also raised $7 million in venture debt from Silicon Valley Bank.

The company plans to market its card to credit-wary millennials who want to avoid getting into a deep debt cycle, but who also want the incentives of owning a credit card.

The Zerocard, as it is called, is a World Mastercard that earns credit card cash back. However, it is combined with an FDIC-backed checking account called Zero Checking. The Zerocard and Zero Checking are combined together into one central app, so cardholders can see at a glance how much net funds they can access. The idea is to help users stay within their budgets.

Zero Co-founder and CEO Bryce Galen said he liked the idea of earning rewards on credit cards, but did not want to have to overspend to get them.

“People spend 10 to 15 percent more on average just because they’re putting it on a credit card, and not seeing where they stand all the time,” he said. “Spending 10 to 15 percent more to chase 1 to 2 percent in rewards doesn’t make sense.”

Zerocard doesn’t charge any annual fees and doesn’t add ATM fees. It also eliminates foreign transactions, minimum balances and overdraft fees.

“Zero creates an innovative debit-style experience, with an elegant design, and truly compelling rewards. It’s a fabulous banking experience,” said Hans Morris, Managing Partner of Nyca Partners and former President of Visa, Inc., in a statement. “Few people understand how complex it is to launch either a credit card or a checking account program, and I believe Zero is the first U.S. startup to launch both.”