Fintech CEO Calls Credit Cards "Horrible Product" as U.S. Debt Hits $1.3 Trillion Record
Renaud Laplanche has built two fintech unicorns by betting that traditional banks are terrible at serving their customers. Now, with U.S. credit card debt reaching an all-time high of $1.3 trillion, he's arguing the evidence is impossible to ignore.
The CEO and co-founder of Upgrade, valued at $7.3 billion, told Fortune in an interview published today that the fintech industry "would not even exist if, frankly, banks had done a better job really delighting their customers with product innovation that moves the needle." It's a remarkable claim from someone who co-founded LendingClub before launching Upgrade—essentially arguing that his entire career exists because incumbent financial institutions created a void through their own failures.
Laplanche reserved his sharpest criticism for credit cards themselves, calling them a "horrible financial product" that has pushed millions of American families to a crisis point. The $1.3 trillion in outstanding balances translates to more than $10,000 in high-interest debt for every family in the country, he noted. Beyond the high fees that are core to credit card profitability, Laplanche argued that the products are "really designed to keep people in debt as long as possible," with minimum payment structures that can trap borrowers in decades-long repayment cycles.
The critique comes as Americans now carry an average of five credit cards each, creating what Laplanche described as a financial landscape "full of land mines." His argument is that banks' reliance on what he called "nickel and dime" fees and "unpredictable" costs created the opening for fintech disruption in the first place.
Upgrade's answer to this problem is products like the "One Card," which combines debit and credit card features to let users "pay now" for everyday expenses or "pay later" for larger purchases. The card provides identical rewards regardless of payment method, removing what Laplanche characterized as the "extra incentive" to carry debt simply to earn benefits. The company's broader mission, he said, centers on helping people "upgrade their finances and their credit" rather than maximizing interest income.
It's a convenient narrative for someone running a lending business, of course. (Laplanche is essentially saying "the incumbents are so bad that I had to build a $7.3 billion company to fix their mess.") But the timing is hard to argue with—$1.3 trillion is not a small number, and it represents real households carrying real debt at rates that can exceed 20% annually.
The question for CFOs and finance leaders is whether this represents a genuine market failure or simply the natural result of consumer demand for credit. Laplanche is betting it's the former, and that there's a massive market for products that help people escape the debt cycle rather than perpetuate it. Whether that thesis holds up will depend on whether consumers actually want to be saved from themselves—or whether the convenience and rewards of traditional credit cards, land mines and all, prove too attractive to abandon.
Either way, when a fintech CEO worth billions says his entire industry exists because banks failed, it's worth asking: what other "horrible products" are sitting in plain sight, waiting for someone to disrupt them?
Responses (0 )