Are the Home Rebate credit card rewards worth pursuing?

Having recently opened up a Wells Fargo bank account, I decided to take a closer look at their credit cards and this one caught my eye. I knew it existed during the real estate bubble, but I wasn’t aware it was still around today.

How it works?

In a nutshell, this card earns a 1% rebate on spending, which is applied towards the principal of your Wells Fargo home mortgage. This happens in multiples of $25 – each time the account accumulates 2,500 points, $25 is applied to the balance of your mortgage.

What’s Wells Fargo spin on it?

Linked to the application page is the Wells Fargo Home Rebate Card savings calculator, which shows your hypothetical savings based on the details of your mortgage and your estimated monthly spending.

(Sidenote: The vertical line you see on the left hand side is a glitch on Wells Fargo’s end that is showing up in every browser I check.)

In the above scenario, I used a $200k 30 year mortgage at 6.25%, with an estimated monthly spend of $1,500.

At first glance, the results look impressive – I would be saving $14,996 over the course of my mortgage! Sounds like a great idea, right? Well before you fill out a Wells Fargo Home Rebate card application here is something you need to consider…

You can accomplish the same thing using any 1% cash back card.

If you had a credit card that gave 1% cash back and applied it to your mortgage’s principal following the same example above, you would be saving the exact same amount of money! The only real advantage the Wells Fargo card offers is that the rebate is automatically applied to the mortgage each time 2,500 points is accrued. Aside from that, there’s no real benefit in applying for it.

What’s your best option?

If your goal is to earn credit card rewards so you can pay off your home faster, than your best bet is to utilize higher cash back credit cards and then use the earned rebate to make additional payments towards the prinicipal of your loan.

If the Wells Fargo Home Rebate rewards were higher than 1% then I would advocate getting it, however you can do much better than that. There are a number of cards on the market that give anywhere from 1.25% to 5% cash back – using those would be a smarter choice and save you a lot more money. Check out these cash back credit card reviews if you would like some suggestions.

Review written March 2011