Startup RewardStock Points the Way to Credit Card Rewards & Travel

Xconomy Raleigh-Durham — 

If someone offered you a way to take a free tropical vacation, you might think it was too good to be true. But Jon Hayes traveled to a tropical island for free. His global jaunts also include trips throughout South America and Europe, all taken for free or relatively little cash cost.

Hayes left a lucrative New York investment banking job to show others how they, too, could travel as he did. His Raleigh, NC-based startup, RewardStock, sets up users with credit card strategies that maximize rewards that can be redeemed for travel.

“All you have to know is how many points you have and where you want to go,” Hayes says. “We outline the best way to get there using points as the currency instead of cash.”

Though Hayes comes from a financial background, his work with credit card rewards is relatively recent. He credits his older brother for introducing him to rewards points strategies. In 2011, the elder Hayes suggested the two visit South America, traveling business class and staying in luxury hotels. Hayes was skeptical. “Even though I worked on Wall Street, I didn’t think I could afford that,” he says.

But Hayes’ brother had already earned enough reward points to finance much of the trip. He advised Hayes on strategies to accumulate points of his own. By the time they booked their travel, they needed just $200 for airfare and hotel—rewards covered the rest.

Hayes returned to his Manhattan finance job but continued the points-earning strategies he and his brother had practiced. In 2012, Hayes used points to take his mother to Europe on her first overseas trip. Hayes married in 2013 and honeymooned in the Maldives, the business class airfare and luxury hotel covered entirely by rewards points. Reflecting on the experience, Hayes concluded that software could have automated his rewards-earning strategies and made travel planning easier. Six months after the honeymoon, Hayes left his finance job to start RewardStock.

Consumers who sign up with RewardStock can use the site to store and manage their points balances. Based on the cards that an accountholder has and the points in hand, the software recommends strategies that can earn even more points. Those strategies include opening new cards. New accounts, Hayes explains, offer the most bonus points. Rewards programs are not created equally and Hayes says his company’s software can recommend which new cards will offer rewards that will best help a user reach his or her travel goal.

Rewards strategies do not necessarily entail carrying a lot of cards and spending a lot of money. Consumers can still accumulate a substantial amount of points with two or three cards, Hayes says. The software tells users the amount of spending over a period of time that is necessary to earn the desired number of points. Hayes is careful to note that RewardStock does not advocate excessive spending. Instead, he says, consumers accumulate points through targeted credit card spending on expenses they would be making anyway.

Consumers are leaving a lot of rewards points on the table. Colloquy, a research firm focused on loyalty marketing, counted 578 million members in credit card reward programs in 2015. Of some $48 billion in rewards value issued annually, $16 billion goes unredeemed, according to a 2011 Colloquy report.

A number of credit card reward apps have emerged in recent years to help consumers earn, manage, and redeem these points. The biggest of these might be Pasadena, CA-based Wallaby Financial. In addition to offering its own app, Wallaby’s software powers points management tools offered by, WalletUp, and The Points Guy’s TPG to Go app, says Wallaby co-founder and CEO Matthew Goldman. Credit card users interact with the technology as a consumer-facing app. But Goldman says Wallaby is a big data company.

Wallaby, which was acquired by Bankrate (NYSE: RATE) in 2014, two years after the app’s launch, maintains what it claims is the largest database of credit card and rewards program information in the United States. Wallaby’s algorithms crunch data about user preferences and rewards programs to recommend to users which of their cards applied to a particular purchase will best bring the cardholder closer to a financial goal. Depending on the user, that goal could be more points, but it could also be minimizing fees or reducing interest. “The average user is not going to sit down and do that math,” Goldman says. “We try to do that math for you in case that competitive decision crops up in your wallet.”

RewardStock’s objectives are more targeted than Wallaby’s. The Raleigh company’s algorithms help users earn and redeem points specifically for travel. But both companies generate revenue the same way. Though their apps are free to consumers, RewardStock and Wallaby make money through affiliate marketing relationships with credit card issuers, which pay the companies a referral fee each time a user acts on a credit card recommendation. RewardStock does not book travel but the company’s software can steer users toward better ways to book flights, which can also trigger a referral fee. In the future, Hayes plans to expand RewardStock’s revenue sources by developing more of these relationships with travel providers.

Hayes says RewardStock stands out from other rewards apps by offering personalized strategies tailored to a user’s travel goal. Also, unlike some apps, RewardStock won’t ask for personal financial information from users, nor does it access a user’s accounts. Hayes says his previous work in finance made him mindful of consumer security concerns. Even though RewardStock doesn’t collect or store user financial information, Hayes says he made it a point for RewardStock’s systems to offer bank-level security.

RewardStock represents a homecoming for Hayes. Born in Durham, NC, he graduated from the North Carolina School of Science and Mathematics, then Princeton, where he majored in economics. Hayes worked on Wall Street for Citigroup (NYSE: C), rising to vice president. But Hayes says he and his wife knew that New York would not figure into their long-term plans. Compared to New York, the new father says North Carolina is more affordable for starting a family and launching a company.

Last fall, RewardStock raised $300,000 from Cary, NC-based Cofounders Capital. Hayes says the seed financing should carry the company through 2016 as RewardStock grows. As Hayes fine tunes RewardStock’s software, he is developing new ways to serve users and diversify revenue. One of RewardStock’s key consumer targets is engaged couples. Just as Hayes financed his honeymoon with rewards points, he believes other couples would be interested in finding ways to defray their own honeymoon costs. The attire, food, and venues for weddings require lots of spending—all of which can be strategically placed on plastic in ways that maximize rewards points, he says.

RewardStock’s longer-term weddings strategy overlaps with the weddings focus of another Raleigh startup. WedPics’ photo and video-sharing app has already gained market traction and sparked interest from investors, who have pumped more than $12 million into that company to date. Hayes says he has met WedPics CEO Justin Miller, who “likes what we’re doing.” Though Hayes says it’s premature to talk about a partnership, he concedes that the thought has crossed his mind.

“Certainly, there are some obvious ways that we could potentially explore [working] together,” he says.

Photo courtesy of Flickr user GotCredit under a Creative Commons license.