Savvy Americans have found a huge loophole with a rewards credit card - should you get one before they ditch it?

Americans are draining Wells Fargo's coffers to the tune of millions by signing up for the first ever credit card centered entirely around paying your rent.

Wells and startup Bilt launched the Bilt Mastercard in 2022, a rewards credit card that attracted over 1 million new accounts in its first 18 months.

With the Bilt card, users can pay their rent without their landlord passing the 2 to 3 percent transaction fee onto them.

Their rent payment is also eligible for points - one per dollar spent - that can later be redeemed to book flights, hotels or rental cars. Or they can be transferred to travel partners including American Airlines, Air France and Marriott Bonvoy. 

Normally, some credit card customers carry balances over from month-to-month - needing to pay interest to the bank. 

But the customers who took up the Bilt Mastercard are savvier than most. 

They aren't carrying balances at nearly the rate executives anticipated -  and so Wells is losing as much as $10 million per month on the program, the Wall Street Journal reported.

Credit card issuers make the bulk of their money from interest they charge if their customers don't pay off their balance in full at the end of the month.

But initial reports suggest Bilt card users have been paying off their card every month because they are primarily using it for rent, thereby racking up free points on what otherwise would be a mandatory expense.

Wells expected 65 percent of purchases on the card would be non-rent prior to launch. The reality ended up being the exact opposite.  

That woefully inaccurate prediction hit the bank hard because, under the existing deal, Wells takes a hit on much of the transaction fees renters would normally be responsible for. 

The San Francisco-based bank has also been paying its partner Bilt a fee of around 0.8 percent per rent transaction.

And even though it earns fees every time someone swipes their card for anything but rent, Wells splits that with Bilt.

Finally, Bilt receives $200 from the bank every time someone signs up for a new account.

It's increasingly looking like this deal is much more beneficial for Bilt and its CEO Ankur Jain who's become a billionaire thanks to the partnership.

Wells told the Journal that dual brandings like this one are a 'modest piece' of its credit-card business.

'As with all new card launches, it takes multiple years for the initial launch to pay off,' aid a spokeswoman for the bank. 'We look forward to continuing to work together to…make sure it's a win for both Bilt and Wells Fargo.' 

Bilt was harsher in its response to the bombshell piece, saying the Journal's reporting 'is an inaccurate representation' of the partnership.

Behind the scenes, Wells is reportedly telling Bilt that cardholders are not paying nearly enough interest for this to ever become profitable.

Meanwhile, Bilt is upset over the bank is replacing marketing of the Bilt card in Wells Fargo branches with its own native credit cards.

The story of Bilt began in 2019, when Jain founded the company. His mission was to find a bank partner to issue its first credit card, since his firm wasn't capable of lending on its own.

Major lenders such as U.S. Bancorp and Synchrony Financial passed on Jain's pitch. He even spoke to JPMorgan Chase about possibly going into business together.

When Jain brought his proposition of a rent-based card to Wells, some employees apparently thought the idea was crazy.

But at this time, Charlie Scharf was the CEO and one of his major goals was to revitalize the company's credit card offerings.

The thought was that they could attract younger customers who were renting for the time being but had ambitions to get a mortgage someday. 

If Wells was the one behind the popular Bilt card, perhaps those cardholders would pick them as their preferred mortgage lender down the line.

The bank's reputation was also on the rocks at the time after admitting to a long-running fraudulent practice whereby company employees opened millions of unauthorized bank accounts in order to meet unrealistic sales goals.

Wells agreed to pay $3 billion in penalties for this conduct back in 2020. 

Unless things turn around in major way, the bank has reportedly told Bilt that it won't renew the contract for the card, which is scheduled to end in 2029.

That means Americans have roughly five years left to sign up for the card that's become the favorite of travel-hungry apartment dwellers.