Did you know that you can use your credit card to get out of debt? Apparently, Wells Fargo is trying to sell that idea to boost their credit card business.
Credit cards are still among the highest debt in the country. Although reports continue to say that people are wising up when it comes to the use of these cards, the statistics still display a relatively high debt amount.
This is probably why it is quite difficult to believe that it can ever be used to help you get out of debt. If you use your credit card, you are putting yourself in debt so it does not really make sense at all.
The Wells Fargo idea of a rebate card
However, Wells Fargo seems to think that it could work. According to a news article published by Reuters on August 5, the said bank is trying to appeal to the growing dislike of consumers for debt. It’s quite a clever product because if you think about it, offering to pay off debt by encouraging consumers to use their credit cards is quite contradicting. After all, when you use your card, you are putting yourself through debt. So how does this all play out?
One word: rebate.
That is what Wells Fargo is trying to sell with their Home Rebate Card. Although this card was launched back in 2007, it recently gained attention in light of the still struggling economy that we are all facing. The whole idea for this card is they will offer a rebate of 1% and it will go to the principal payment of your Wells Fargo home loan. The bank revealed that this is the first among the many cards that they will produce and it will all run along the same line. The upcoming cards will specifically help holders pay down their auto loan and other personal loans with every purchase made via this rebate card.
So does that make sense to you? If you think about it, you are actually hitting a couple of birds with one stone here. By using this card:
You are putting a percentage of that amount into your home loan (or whatever loan type your card is tied up with).
You are continuously putting data into your credit report that can help build up your credit score.
You can use your credit card without feeling too much guilt about it.
You will feel more inclined to pay off your credit card balance because there is more than one debt at stake. You want to keep this credit line clear for the reason that it helps you pay your other debts too.
These are some of the things that we have deduced with this marketing strategy. Although the article cannot claim if this arrangement is actually appealing to consumers, the bank claims that their customers had been able to pay around $50 million in home loans since 2007.
Obviously, the whole thing will crash if consumers cannot control their credit card debt. The high interest of this debt can get to be quite a burden so if this arrangement is appealing, you have learn how to use your credit cards wisely. Things like paying down the balance of your credit card within the grace period is a very important habit that you should develop. If you cannot accomplish that, then you may want to think twice before you put yourself through this risky arrangement.
Another way you can find debt relief through credit cards
Other than this rebate card, there are also other ways that you can use your credit card to pay off your debt.
One of them is through balance transfer cards. This is a credit card account that you can avail with an introductory promo of zero percent interest. The promo usually runs during the first 6 to 18 months of the account. During this time, any payment that you will make towards your balance will be towards your principal debt. Of course, you have to transfer your debts to this card first and that requires you to pay a balance transfer fee. It is either a fixed amount or a percentage and should be no more than 3% of the transferred debt.
Here are some tips to help you enjoy the full benefits of balance transfer.
Take advantage of the teaser rate during the promo period. If not, you could end up with a higher debt amount after the promo ends.
Know the details of the promo. Find out when the promo will expire, how much interest will be imposed on you after the promo and whether the zero interest is applicable only to the transferred balance or also to new purchases.
Ask about the repercussions of being late on your payments. Sometimes, creditors will remove the teaser rate if you miss even just one due date.
Learn how to curb your credit card spending. This is quite necessary if you really want to keep yourself from incurring more debts.
In truth, your credit card can be a tool to help you solve your debt problem but it has to be coupled with proper spending habits. If you cannot control it, then it may be best to just opt for a different debt solution.
If you want to get help for your credit card debt, view the video after this article.