How Kasheesh’s Sam Miller analyzes shifts in consumer credit behavior and payment strategies

Consumer behavior around credit utilization and reward optimization is undergoing significant changes. As inflation and rising interest rates strain budgets, more consumers are turning to alternative payment methods and seeking ways to maximize their credit. Sam Miller, CEO of Kasheesh, shares insights into these emerging trends, particularly in the context of high-spend events like Amazon Prime Day. He highlights how shifts in spending habits, the rise of Buy Now, Pay Later (BNPL) options, and increased awareness of credit utilization are shaping the financial services industry.

In this interview, Miller also delves into how AI and machine learning are transforming credit strategies and reward optimization, offering consumers tools to manage their finances more effectively. With Kasheesh’s innovative “Smart Split” technology on the horizon, the conversation explores the future of flexible, multi-use payment methods and the implications for traditional credit card providers and banks. As Miller discusses the opportunities and challenges ahead, he emphasizes the importance of financial education and the growing demand for solutions that help consumers build stronger financial foundations.

Recent market data suggests a shift in how consumers manage multiple credit accounts and optimize rewards. What key trends are you observing in consumer credit behavior, particularly during high-spend events like Amazon Prime Day? How is this impacting the financial services industry?

Sam Miller, CEO, Kasheesh 

At Kasheesh, we’re observing a significant increase in spending on rent, utilities, wholesale merchants, car payments, student loans, and other expenses typically not covered by credit cards. This trend highlights the reality for 78% of Americans living paycheck to paycheck and underscores the urgent need for flexible financing options beyond traditional retail. As we see concerns about the global economy, how consumers are spending is bound to change how people manage their credit, and will trickle into the financial services industry. 

Additionally, we’re seeing a substantial rise in the Buy Now, Pay Later (BNPL) sector. During Prime Day, approximately 7.5% of transactions were made using BNPL. Total BNPL spending reached $540 million, marking a 17.1% increase from the previous year. However, these loans negatively impact consumers’ credit scores and contribute to budgeting challenges.

These are significant behavioral shifts. As consumer savings continue to dwindle due to inflation and rising interest rates, there will be increased demand for products that help consumers better manage their budgets and utilize their credit cards effectively. Solutions that address these needs can support improved credit behavior, rather than simply deferring payment issues that could ultimately harm credit scores.

AI and machine learning are increasingly prevalent in personal finance. How are these technologies transforming credit utilization strategies and reward optimization? Can you provide examples of how this is benefiting consumers and potentially changing their financial habits?

Many consumers are unaware of how important credit utilization is when factoring your credit score – roughly 30% of your credit score is calculated based on your utilization rate. Anything under 30% utilization will benefit your credit score, anything over 60% will significantly damage your credit. We’re actively working to solve the problem by building an AI engine that will have, what we’re calling “Smart Split” technology.  The idea is this product, which we are hoping to launch in Q3 or Q4, will automatically  break down the amount our consumers put on their underlying cards, and then split the purchase across their debit, credit and prepaid cards to keep utilization rate below 30% whenever possible. 

This AI will lead to education for consumers through the process of transactions, whereas they’d previously have to do so before or after the transaction itself. Meaning, they’d have to spend hours educating themself through articles that they don’t have time to read, or making a transaction and seeing the negative impact once it’s already too late and the damage has been done. Our goal is to strengthen consumer education without the negative repercussions of harmful transactions. 

The concept of flexible, multi-use payment methods is gaining traction. How do you see this trend evolving, and what implications does it have for traditional credit card providers and banks? What challenges and opportunities does this present for the industry?

It presents a truly unique opportunity by enabling traditional issuers and card networks to be top of wallet while leveraging innovation from the consumer’s perspective. Currently, banks are investing millions of dollars in customer acquisition to make their cards top of wallet, often increasing the baseline loan-to-value ratio just to break even. Additionally, once consumers reach the threshold for incentives, there’s a risk they may never use the card if they find a better deal elsewhere.

Kasheesh offers a solution by allowing all cards to be top of wallet, thanks to a different incentive structure. Instead of focusing solely on incentives, Kasheesh emphasizes greater credit utilization and better budgeting. With flexible spending, every card has the chance to be top of wallet and participate in transactions that it might otherwise miss.

Our Multi-Use Card was built with the need for greater credit utilization and better budgeting mechanisms in mind. It builds on our Single-Use Card by offering a recurring card that can be easily loaded and used with Apple Pay and Google Wallet. The recurring nature of the card eliminates the need to generate a new number for each purchase, making subscriptions and daily transactions more efficient. Purchases can be split across up to five debit, credit, and gift cards by choosing a percentage for each. This enhances security and allows for better credit utilization. As we roll out the smart split technology, customers will then be able to optimize their credit utilization with every purchase.

Looking ahead, how do you envision the credit utilization and reward optimization space evolving over the next 5 years? What potential impacts could this have on consumer financial health and the broader financial services ecosystem?

Given that younger generations are less likely to have credit cards than older demographics, it’s going to be one of the most important financial focuses. In the United States you can do very little without a credit score, let alone a good one. 

Bank regulation is only going to become more stringent, rates have consistently been increasing, inflation has decimated savings, and it’s become increasingly harder to build a solid financial foundation. Without the early dedication towards building credit, younger generations will be well behind the eightball, playing catch up that takes years to build. Now factor in BNPL, Student Loans and other payments, and the upcoming credit crunch for younger consumers is something that will only continue to grow. 

Combined with limited budgets and a higher cost of living, the only solution they’ll have are solutions that provide an easier way to afford these burdens while aiding in the uphill battle of building a great credit score, and helping them budget. The cost of living is something that younger generations will have to deal with and as the behaviors are showing, those products that help with credit utilization and budgeting will end up being the financial products that find success.