Wells Fargo has credit cards on the brain

By , CardRatings contributor
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It may be the fourth-largest holding company in the U.S. in terms of assets, but Wells Fargo is a relatively minor player in the world of credit cards. However, that may be changing with news that the bank has set its sights on grabbing a larger share of the credit card market.

The company had already seen an increase in the number of consumers carrying one of the bank's cards, according to The Wall Street Journal. This year, 35 percent of Wells Fargo customers are using one of the bank's credit cards, up four percent from 2012.

To keep the momentum going, Wells Fargo is looking to appeal to consumer distaste for debt and has also announced a new partnership with American Express.

Home Rebate Card is a $50 million success

As Wells Fargo tries to improve its market share, the company may be looking to expand on the success of its current Home Rebate Card. Launched in 2007, the rewards credit card allows consumers to earn rebates to be applied to their home mortgages. The company said earlier this year that card holders have paid down their mortgages by a combined $50 million.

Nearly three in every ten home loans issued last year came from Wells Fargo, according to data from Inside Mortgage Finance. If the company can convince even a portion of those millions of borrowers to sign up for its Home Rebate Card, the company could see its share of the credit card market jump significantly.

Of course, the same model could also be used for other forms of debt. Wells Fargo noted in a 2012 report that it holds the number two position for market share in private student lending. With parents and students both feeling squeezed by increasing education costs, a rewards credit card linked to paying down student loans may prove to be a hit.

Now, it is important to note that Wells Fargo hasn't made any sort of announcement regarding a student loan credit card, so this is all speculation on my part. However, if I sat in the executive chair, it would be a no-brainer to me.

American Express cards coming to Wells Fargo

While it remains to be seen if and how Wells Fargo will expand its rewards credit cards in the future, there is no question about whether American Express will finally be available through the bank -- the companies recently announced a new partnership.

"We are delivering on our strategy to expand our credit card business," John Stumpf, Wells Fargo CEO, said in a written statement. "Our goal is to offer Wells Fargo customers a suite of cards that help them meet their financial goals. We're proud to have American Express as a partner in this effort -- a great company with a proven brand for customer service."

Bringing American Express into the fold may help the bank reach a different class of customers. Rewards cards such as the Home Rebate Card may appeal to budget -conscious consumers, but American Express has historically catered to the more affluent.

By offering several credit card products that serve different populations with different financial needs, Wells Fargo appears to be positioning itself to grab a bigger portion of the credit card pie. For bank customers, this could mean more balance transfer offers and other deals could be on the way.

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