U.S. credit cards help reduce mortgage principal

By Jonathan Stempel

NEW YORK, April 4 (Reuters) - As more Americans struggle to make payments on their homes, Wells Fargo & Co. (WFC.N: Cotización) is joining other lenders in introducing a credit card to help people pay down their mortgages faster. The No. 2 U.S. mortgage lender's Home Rebate card joins cards offered by Citigroup Inc. (C.N: Cotización), Bank of America Corp. (BAC.N: Cotización), GMAC and Countrywide Financial Corp. CFC.N, among other lenders, to help homeowners reduce mortgage principal. Wells Fargo described its card and its terms on its Web site.

"It's a relatively new trend, and a novel concept," said Curtis Arnold, a consumer advocate who founded CardRatings.com of Little Rock, Arkansas.

"If you're blowing your budget to pay down your mortgage, that doesn't add up," he added. "If you use a card responsibly, it can be an effective way to pay down mortgage debt."

Wells Fargo, the fifth-largest U.S. bank by assets, has largely avoided turmoil afflicting many mortgage lenders as homeowner delinquencies and defaults soar, especially among "subprime" borrowers with weak credit histories.

The card launch also comes as consumers face a blizzard of choices for so-called "rewards" cards.

"Everybody has a 'hot button' for rebates -- for some, it's airline miles, for others, it's hotels or gas," said Peter Ho, a Wells Fargo vice president, in an interview. "Our goal is to make sure our customers financially succeed."

HELPING BORROWERS SAVE