Written by Staff Writer
Using a credit card to buy something online may make the transaction seem less than convenient. But for Wells Fargo , eliminating interest payments on credit card purchases isn’t just beneficial for consumers, it’s also a way to help businesses.
Starting in June, a new loyalty program for the company’s cardholders offers a 0% interest rate on select purchases. In total, the exclusive program will save Wells Fargo cardholders $2.5 billion in interest payments over the next eight years. So, what are these three points of interest?
With online shopping increasing, credit card companies are promoting loyalty schemes for customers who spend more, but discounts on purchases may sound appealing. Some consumers may prefer the hassle of using their credit card online to make a purchase, versus using their debit card or a cash back rewards program.
A spokesman for Wells Fargo told CNN that the program is specifically aimed at consumers who do not have a credit card but who do have a checking account or ATM debit card that they use.
This program means that consumers that want to spend money online but do not have a credit card can get a discount on purchases made at online retailers. The program includes large retailers like Apple, Target, AT&T, Virgin Mobile, Starbucks, and Alphabet’s Google, and involves the customers’ online purchases with Amazon, Uber, and Lyft.
But why would banks want their customers to go to these retailers? Well, the retailer itself is a “co-brand partner” on the program, and, according to Wells Fargo, it is a way for Wells Fargo to build consumer loyalty.
How do they do that? By incentivizing consumers with discounts. Each click on the “Buy now” button now results in a 0% APR discount on the purchases. The discounts come to a max of 1% for purchases made with Apple , Target, Amazon, and Uber.
Is there anything else? No. Shoppers cannot make an online purchase with mobile rewards (an option available on Wells Fargo cards, but not on bank ATMs), and there is no redemption period.
The terms and conditions of the program are slightly different for debit card holders. The program is available for purchases made at point of sale (POS) merchants and discounts are applied within 60 days. The maximum discount can be 2% for all purchases and 0% at all POS merchants. Additionally, debit card holders can earn interest free cash as soon as the account balance reaches $1,000.
According to a statement on Wells Fargo’s website, the program will be available for new and existing cardholders as of June.