SAN FRANCISCO--With the housing market recovering, Wells Fargo plans to ramp up the marketing of a credit card that allows customers to use reward points to pay down their mortgage. Wells, the largest home mortgage lender, is sending new solicitations for its Home Rebate Card, which it introduced in 2007 just before the housing market collapsed.
Beverly Anderson, the head of Wells Fargo's consumer financial services group, told American Banker customers have used the card to pay down roughly $50 million in mortgage principal over the past five years. To date the card has only been marketed to new borrowers but, as part of its ongoing effort to increase card penetration, Wells will soon start offering it to existing mortgage customers.
"Cash back is a well-known product in the credit card space so it was a very unique idea to link it to something with cash back that consumers really care about, which is paying down their home mortgages," says Anderson.
Wells estimates that a cardholder with a $150,000 mortgage who spends $1,500 a month on the credit card can shave a year of payments off a 30-year mortgage. Wells has an online calculator that allows customers to plug in their mortgage principal and determine how much they could save using the card.
Though the economy has improved, consumers clearly are still worried about their ability to pay their mortgage.
"People get that the more they put on this card, the faster they pay down their mortgage," says Anderson.
Customers typically spend three times more on the Home Rebate Card than on other Wells' cards. They also are spending higher amounts per transaction on the card, she says.
No Similar Cards
At March 31, Wells said that 34% of its retail customers had a Wells-issued credit card, up from 30% a year earlier but still below where Chairman and Chief Executive John Stumpf would like it to be.
There currently are no other credit cards that link cash back to paying down mortgage principal, Paterson says. A similar card that Citigroup had introduced in 2000 has since been discontinued.
