Are Wells Fargo Home Rebate Card Rewards a Gimmick?

Wells Fargo loves to brag about the rewards it pays homeowners with its Home Rebate Card. The bank claims to have paid Wells Fargo homeowners principle reduction to the tune of $50 million (a nice round number) since the program started in 2007. Sounds like a good deal or is it like those airline reward points from some credit cards that never materialize? Here’s the scoop on the Wells Fargo Home Rebate Card to help you decide if it’s a worthwhile deal.

How The Wells Fargo Home Rebate Card Works

The program is open to Wells Fargo mortgage customers that take out the Wells Fargo Home Rebate credit card. Once you’ve got the card you get a one percent rebate on your eligible purchases that is applied to your mortgage loan’s principal balance.

The bank doles out the rebate in 25$ increments meaning you’ll get $25 credited to your mortgage principal after you spend $2500.

Assuming that the program stays around for 30 years, if you have a $250,000 home loan and you spend that $2,500 every month using the card, Wells Fargo would pay down $8,525 of your mortgage principal balance over 30-years of the mortgage.

This amount is compounded with a shorter mortgage amortization period to a savings of approximately $16,000. It also shortens your term length to 28 years and seven months, meaning you get to pay off that mortgage loan a bit faster.

This is all done by Wells Fargo automatically, the only thing you have to do is use the card for all of your purchases. Wells Fargo sweetens the deal (temporarily) by upping your rebate to three percent for groceries, purchases at the drugstore, and gasoline. Unlike the Bank of America rewards card Wells Fargo only rebates the higher amount for the first six months that you’ve got the card.

There is fine print that you should be aware of that excludes some times of mortgage loans including commercial properties, 2nd mortgage loans, agricultural mortgages, piggyback loans and any home loans that Wells Fargo hasn’t funded yet.

The Truth About Credit Card Rewards

The mortgage principal reduction paid by Wells Fargo is a good thing; however, there is a downside like any other credit card offer out there. The biggest downside about Wells Fargo’s Home Rebate Rewards is that you have to open a credit card account to participate. Credit cards are just a means to acquire more debt, especially if you use the program as Wells Fargo intended.

This isn’t necessarily a bad thing if you pay off your purchases every month; however, if the financially irresponsible could find themselves with even more debts.

Another problem with Wells Fargo’s Home Rebate Rewards is that you’re only earning one percent. There are better offers out there that pay as much as five percent on certain purchases averaging two to three on everything else.

You could apply for a credit card with a better cash rewards program and send in your cash rebates to Wells Fargo as principal payments and come out ahead.

If you’re interested in saving money on your mortgage financing, adopting a bi-weekly payment schedule with any of today’s best mortgage lenders pays down principal and has much more compounded savings than any credit card reward program.

Another problem with Wells Fargo Home Rebate Rewards is buried in the fine print the bank discloses that if they ever sell your home loan your eligibility to participate ceases. They can also pull the plug on the program at their discretion.

As with any credit card if you carry a balance you’re paying a lot more in interest than you’re earning so the net effect is that you’re losing money to get one percent of your purchases.

Pros & Conos of Wells Fargo Home Rebate Rewards

Wells Fargo Home Rebate Rewards Card Pros:

• No annual cardholder fees
• No dollar limits on the rebates you earn
• Your Mortgage Principal pays down faster
• Pay Less Mortgage/Compounded Savings
• Shorten Your Mortgage Term Length

Wells Fargo Home Rebate Rewards Card Cons:

• You have to get a credit card
• You have to spend to earn mortgage credits
• Finance charges if not paid off every month
• More debt
• Your mortgage could be sold and you’re out of the program
• Wells Fargo could dump the program

Are Wells Fargo Home Rebate Rewards a gimmick? Considering how much money banks like Wells Fargo make off credit card reward programs it sure sounds like a gimmick to me, but you decide.