With a Wells Fargo survey finding that nearly 40 percent of homeowners are very concerned about debt and more than half want to save more while reducing what they owe, Wells Fargo & Company (NYSE:WFC) announced tools to help consumers do just that, while also introducing resources to use credit better for a lifetime.
Wells Fargo is unveiling its first-of-its kind Wells Fargo Debt Pay Down Solution®, which allows customers to consolidate their monthly payments through a personal loan and help find money to pay off the loan faster. It is also offering the Wells Fargo Cash BackSM Card and the Wells Fargo Cash Back College Card, which incent customers to pay down debt by offering cash-back rewards that they can use to reduce credit card or personal loan balances or add to checking or savings. And lastly, Wells Fargo is offering its Smarter CreditTM center (wells fargo.com/smarter_credit), an online resource center with information about how to establish, rebuild and use credit.
"These new tools and solutions are excellent examples of our commitment to helping customers manage money better and reduce debt and increase savings, especially in stressful times," said Kevin Rhein, Wells Fargo executive vice president of Card Services and Consumer Lending. "A great place for consumers to start is the Smarter Credit online center, or they can visit with one of our bankers in our stores or over the phone."
For the fifth year, Wells Fargo surveyed homeowners, since they are a major source of concern during the downturn and make up some 70 percent of U.S. households. The survey, completed after the Nov. 4 election, demonstrated concerns Wells Fargo wants to address. For example, two in five homeowners with debt beyond a mortgage (41 percent) think about debt every day, and another fifth (22 percent) think about it once a week.
Debt Pay Down Solution: Consolidate Bills, Increase "What's Left," Accelerate Pay Down
The Wells Fargo Debt Pay Down Solution is a three-part program. First, customers consolidate high-interest debt and may get lower monthly payments through a Wells Fargo personal loan. Second, customers use the new Wells Fargo Online® tool called My Spending Report with Budget Watch to find opportunities each month to spend less. Third, they transfer extra money they were able to find to the principal of the new loan to accelerate the loan pay-down. As an example, an extra $41 a month applied toward the principal could pay off a $10,000, five-year loan in four years (assuming an interest rate of 13 percent).
According to Ron Shevlin, senior analyst at Aite Group, "The Debt Pay Down Solution represents an important shift in how banks need to grow customer relationships. Today's consumers don't just need help in managing debt, they need education - and just as importantly - tools for managing their financial lives."
Credit Card Options Give Cash Rewards to Pay Off Debt -- or Add to Savings
The Wells Fargo Cash Back Card and the new Wells Fargo Cash Back College Card start by rewarding customers for their credit card expenditures with a full 1 percent in cash back. Then, depending on their personal desires, customers can use the money to reduce debt, increase savings or just add to their checking accounts.
Once customers have earned $25, they can apply the reward toward a personal loan or line of credit or to decrease their card balances. Alternatively, they can add the cash to their savings or checking accounts or get it in a check. Customers also can add their Check Cards to the Cash Back program at no cost to earn 0.25% on their Check Card purchases. Only signature-based purchases qualify.
Many Lack Knowledge About Credit - Smarter Credit Approach Can Help
According to the survey, two thirds of homeowners with personal debt said it was either affecting their relationships with their spouses or partners or causing them to socialize less with friends. At the same time, homeowners had a lack of knowledge about various credit options. Only slightly more than half or fewer felt very knowledgeable about credit cards, auto loans, home mortgages, and home equity loans. Younger generations were even less knowledgeable.
"Our new Smarter Credit approach can help homeowners and others get on the right track toward budgeting, paying down debt and saving for their futures," says Jamie Moldafsky, an executive vice president in the Wells Fargo Home Equity Group and a leader of the initiative. "Now is a great time, especially with the New Year coming, to help consumers look at the big picture and make changes that will benefit them for a lifetime."
The Smarter Credit center begins with a section on how to establish or rebuild credit, including information on how to order free credit reports and learn money skills for life through Wells Fargo's Hands on Banking®/El futuro en tus manos® program. Highlighted throughout is "3 Steps to Smarter Credit Choices," which walks consumers through a process to better understand their personal situation, make the right credit choices and develop lifetime habits to improve their finances.
"By providing these services, Wells Fargo is demonstrating its commitment to customer advocacy - doing what's right for the customer, and not just its own bottom line," added Shevlin. "Gen Y'ers, especially, are more aware about the importance of their credit scores and more likely to already be concerned about saving for retirement than Baby Boomers were at that age. Wells Fargo's over-all commitment to advocacy will likely pay dividends in terms of greater customer loyalty in the long run."
About the Wells Fargo Homeowners Survey
The survey of U.S. homeowners, conducted for Wells Fargo by marketing research consultancy Ipsos Insight, polled homeowners nationwide about their attitudes and behaviors toward debt and their use of credit. This was the fifth year that Wells Fargo has surveyed homeowners.