When many of us think of credit card rewards programs, we think of earning cash back, or building up miles that can be used for travel. But what if your credit card rewards went toward paying off some of your other debts? What if you could earn credit card rewards that would be applied toward paying down your mortgage or your car loan?
That’s the idea behind the latest rewards program introduced by Wells Fargo. According to Reuters, Wells Fargo is rolling out new credit card programs that will allow consumers to earn credit card rewards that can be applied to the balances of their other loans.
Back 2007, according to the Reuters article, Wells Fargo introduced a credit card that offers a 1 percent rebate that is applied automatically to a home loan held at the bank. The success of that program has prompted Wells Fargo to expand that program to include certain consumer loans as well. The new credit card rewards program is designed to include rebates toward auto loans and student loans.
Keeping it all at Wells Fargo
With data from the Federal Reserve indicating that credit card debt has remained flat the last three years, this is a way to boost credit card business, reports Reuters.
However, it might also serve another purpose. Since the loans eligible for the rebate must be held at Wells Fargo, it also encourages consumers to keep more of their debt with Wells Fargo on top of opening a credit card account that helps them pay down their other debts.
Banks that adopt a policy like this could benefit. Not only do they encourage consumers to open new credit card accounts with the promise of rewards that will help them pay off their loans, but it also encourages consumers to consolidate their debt with one institution. That can mean more earnings in interest charges for the banks.
What do you think? Would you sign up for a credit card that offered a rebate on another loan?
Miranda Marquit is a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline.
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4 Responses to “New credit card rewards program pays your other debts”
As hard as I worked to be free of regular banks & being nickeled & dimed into the poor house by them, NO WAY would I consider connecting anything financial with any bank I didnt need to. They are not to be trusted!
I use my Capital One for most purchases because at 1.25% it offers the best reward overall. However, I have a Sallie Mae card similar to this WF card that gives me 5% back on the first $250 of gas and of groceries (though it seems they’re switching to quarterly 5% reward categories). I’ve had it for about a year and already earned almost 2 months of student loan payments back. I would totally do this, if WF’s percentages were more worthwhile. When used responsibly, these are a great perk.
I’ve been using the WF Home Rewards Visa for several years as my “default” card. (For purchase categories which fall into the 1% “Everything Else”). However, I have recently acquired the Capital One Quicksilver card which pays 1.5% on everything and can be redeemed for cash monthly, with no minimum to cash out. I will simply use those rewards to chip away at my mortgage.
I use my Chase Freedom when I purchase anything in the 5% bonus category (like gasoline this quarter). And, I use my AmEx Blue for gas (2% all the time) and groceries (3%) at stores which take AmEx. My regular grocery store does not accept AmEx, which is why I don’t have the Blue Preferred. (Blue Preferred pays 6% groceries, 3% gas but has an annual fee).
I put every bill and expense on rewards cards that I possibly can. With the occasional bonus signup offers, it’s a rather nice stream of tax-free income. 🙂
Given that Wells Fargo offers the mortgage paying card to me on a regular basis and I haven’t bitten yet (preferring cash rewards at a higher rate), no.