Credit card customers should be 'mindful of ongoing earn' benefits: Analyst

Krista Phillips, Wells Fargo Credit Cards Head of Branded Cards and Marketing, explains which credit card rewards consumers should be more aware of, ranging from travel expenditures to points for paying for food.

Video transcript

- Americans are leaning into credit card rewards to help offset rising costs, according to a new Wells Fargo study. 92% of Americans are concerned about inflation. And nearly half of all reward card holders say they're leaning on rewards to help cut costs on everyday purchases. Well, joining us now is Krista Phillips, Wells Fargo Credit Card's head of Branded Cards and Marketing. Thank you for joining us. So in terms of the trends that you're seeing as people are really taking on some pretty historic credit card debt right now, where are they spending primarily?

KRISTA PHILLIPS: Yeah. So first of all, thank you for having me. Nice to be here. I'm Krista Phillips. And love to talk about credit cards. So when it comes to credit card spend, you know, over the past couple of years, we have seen category shifts in where people are spending their money. Not surprisingly, right now our top categories are groceries and gas. But, you know, in a recent study, we do know that consumers are also planning travel. And so travel is a very important category to us as we think about rewards and credit card spend.

- So those rewards, I mean, what are they using that on? I mean I'm thinking about a Chase Sapphire card that I have. You can use those points in any way you want, whether it's for travel or to pay down your credit card debt. What are you finding?

KRISTA PHILLIPS: Yeah, we're seeing that a lot of customers and nearly half of them are leaning on their credit cards to help offset the cost of everyday purchases. So what we're seeing is that some of our top redemption categories are really to pay themselves back. And so they're taking all of those credit cards rewards with cash or points and redeeming to their own account, whether it's paying themselves back on their credit card account or redeeming into their checking account at Wells Fargo.

- And with-- Krista, with people now spending-- using their credit cards for sort of everyday purchases versus, say, the cash they had on them or their checking accounts, what does this mean in terms of the credit card debt trends that you're looking at? What should people be mindful of?

KRISTA PHILLIPS: I would say that use your cards wisely, always pay the minimum, of course, and be responsible. But also maximize your credit card. So if you have credit cards that have accelerated earn in different categories that you're passionate about-- like, for instance, we launched our Autograph card not too recently that has three points accelerated earn in travel categories. And when we think about travel, we are very mindful in thinking about not just air and hotel, but transit. As people are starting to get back to work and the rising cost of gas, we also have accelerators on those categories. So I would say my advice is to really be mindful of where your credit cards are allowing you to earn accelerators in different categories that are important to you.

- Krista, from the credit card company perspective, I mean, we have seen them certainly move aggressively during the pandemic. A lot of Americans taking-- signing up for those credit cards that offer zero interest for 12 months. So they can put the purchases on there, worry about paying them down down the line. Are you seeing more of those signups right now? Because the offers are still coming through.

KRISTA PHILLIPS: Yeah. So I would say that about 70% of adult Americans have a credit card with rewards attached to them. But pricing also becomes a really important aspect, as well, as you said, there's 0% introductory offers across the board. And so we're seeing a little bit of both. What we were mindful of as we were re-inventing our portfolio of credit card offerings is that we have cards that are meaningful for those that are really passionate about different categories of spend, like travel, gas But also, you know, who are price seekers and may not pay back the full amounts every month, but really are seeking to have a long-term engagement with us over, say, you know, 18 months or 21 months.

- And we're seeing a number of banks really giving some of these incredible offers when it comes to welcoming on your consumers. But a lot of times that also comes with a particular spend level that you have to hit in order to meet-- to get some of these deals. What should people be mindful of as we perhaps might be at risk of overspending just to get these deals that might put us into more debt?

- Yeah, as we reinvented our credit card portfolio, we were really mindful of it's not just about the introductory offer, although that does sweeten the deal. And you have high intro bonuses or cashback up front. We have a $200 offer on our Active Cash card, with $1,000 over three months. So I'd say be mindful of the spend hurdles. But also be mindful of the actual ongoing earn of the credit card. While introductory offers are great, you know, the real value comes in when you have ongoing benefits like a 2% cash back, like we have on Active Cash.

- There you go. Don't just get lured in by those introductory offers. A big thank you. Krista Phillips, thank you so much for joining us this afternoon.