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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