Is Elon Musk’s New ‘X Money’ Platform Too Good To Be True?

You probably know about Twitter being called X these days. But have you heard about the social media platform’s new X Money platform?

Elon Musk is known now for electric cars, rocket ships and social media takeovers, but he got started in the online payment space as one of the key innovators and investors at PayPal around the turn of the century.

Musk is going back to his roots as he tries to turn his X social media platform into an “everything app” with the introduction of X Money.

X Money touts that Premium and Premium+ subscribers can earn up to 3% cash back on eligible spending with the X debit card and up to 6% APY on deposits that are FDIC-insured through a partner bank.

That’s bold. But is it too good to be true? Money expert Clark Howard weighs in:

“This is a loss leader as Musk is trying to establish market share,” Clark explained about the surprisingly good rates. “In other countries in the world, it’s very common that various social media apps of various types not only are involved in trying to connect you to other people and other content, they’re also trying to be your wallet. And, so, Musk is trying to do that with X…

“So, these are just teaser rates. And once they get enough market share, let me tell you, they’re not going to be offering this kind of sweetheart deal. This is one of those things you got to be someone who doesn’t live by inertia. You take advantage of what’s available to you as a premium X user, get the deals, and then when they don’t have the deals anymore, you say: ‘NEXT!’”

Let’s take a closer look at what X Money has to offer and put it under some scrutiny to see if it might be an option for you.

X Money: 5 Things To Know

X Money is a function of the X social media app, so you have to be a member of X (formerly known as Twitter) to use it.

It has a handful of financial functions, including a deposit account that accrues interest, a debit card that earns you cash back when you spend with your balance, and a peer-to-peer payment system that lets you instantly transfer money to other X users.

Here’s what you need to know:

1. You Can Get Up to 6% APY on Your Deposited Money

If you’re paying for a Premium X subscription, you can get some pretty great rates on your deposited money. This is a little different than a high-yield online savings account, but the functionality is very similar, and the returns can be better.

X Money is a fintech company, not an FDIC-insured bank. However, deposit accounts are held at Cross River Bank, Member FDIC, and are automatically enrolled in a cash-sweep program that can provide up to $10 million in aggregate FDIC coverage across multiple banks. Standard coverage is $250,000 per depositor, per bank.

Premium+ users can earn 6% APY.

Premium users start at 4.00% APY and can boost to 6% by receiving qualifying direct deposits of $1,000+ within a trailing 34-day period or by receiving qualifying creator payouts.

This is competitive with top high-yield savings accounts right now, but remember that you must pay for X Premium or Premium+ to access it. Factor this subscription fee (starting at $8 per month) into your net return, and remember rates can drop at any time.

Here’s a quick breakdown of how subscribers qualify for each tier of savings rates:

2. You Can Earn Unlimited 3% Cash Back on Eligible Purchases with the X Card

Not only will you earn interest on deposited money, but you’ll also get a chance to earn cash back when you spend it.

The X Card, which is a metal Visa-backed debit card, comes included with your X Money account. This lets you spend your balance and earn an unlimited 3% cash back on purchases.

This is a great return on spending, but it’s different from earning rewards with a credit card. You’ll need the money in your X Money account to make a purchase, and you’ll have the inferior protections of spending with a debit card.

The X Card touts the following:

• 3% cash back on eligible purchases
• Free cash withdrawals at any ATM worldwide
• No foreign transaction fees
• Use it everywhere Visa is accepted
• Purchases are protected by Visa’s Zero Liability Policy, so you won’t be held responsible for unauthorized charges

Note: When it comes to spending, Team Clark typically advises using an unlimited 2% cash back, no-annual-fee credit card for your purchases and then paying the balance off in full each month. This gives you the superior consumer protections of a credit card and what is essentially a 2% discount on every purchase you make.

3. There Are Some Restrictions To Getting an Account

Accounts aren’t open to just anyone at this time.

As of this article’s release date, you need to be a Premium or Premium+ X subscriber to qualify for opening an X Money account.

This means you need to pay a monthly or annual subscription fee for higher-tier access to the X social media app and its AI platform, Grok.

If your account is eligible, you’ll see the “Money” tab in your sidebar on the X app and X.com. Tap it and follow a few simple steps to onboard. X says to make sure your app is updated to the latest version.

Other restrictions include:

• Must live in the United States
• Must be 18 or older
• Currently unavailable in New York and Massachusetts due to licensing issues

You’ll be required to properly identify yourself (just like you would with an online bank) and verify your X account. That means no hiding behind a “burner” or “trolling” account on social media and enjoying the benefits of X Money.

4. You Can Send Money to Other X Users for Free

One of the key features of X Money is the ability to send money to other X Money users in real time. This is free, with no limit on the number of transactions.

This integration of money and social activity is designed to make the app more immersive. It’s not exactly a new playbook. Apps like Facebook have allowed users to send each other money, and payment apps like Venmo and PayPal have made efforts to make sending cash between users a more social experience over the years.

5. You Get Bill Pay Capabilities and Can Get Early Direct Deposit

In addition to your savings, debit and peer-to-peer functionality, X Money is also trying to provide some of the services you may enjoy with a more traditional banking experience.

This includes bill pay tools and the ability to access direct-deposit paychecks up to two days early.

Bottom Line on X Money

If you already have an X Premium or X Premium+ subscription, the barrier to access these rates is really low.

This could make it a great opportunity for select X customers.

Just go into this situation heeding Clark’s warning about the pitfalls of paying with a debit card and with realistic expectations about what he calls “teaser rates” that are likely to be reduced once X Money gains its desired market share.

Once those great rates are gone, you should be ready to move on, too.

Would you consider adding X Money to your financial life? We’d love to hear where you stand in the debate in the Clark.com community.