[Update: Some offers mentioned below have expired. You can view the current offers from our partners here — Capital One Venture Rewards Credit Card. Disclosure: Cards from our partners are mentioned below.]
Would you think to apply for a mortgage with your credit card company? Capital One wants its customers to consider its mortgage products, and is now offering 100,000 miles to current cardholders who purchase a new house or refinance their current home loan with the bank.
Customers who hold a credit card that earns Capital One miles — such as their Venture Rewards card — who apply for a mortgage Jan. 22-Feb. 28, and close on the loan before May 15, will have 100,000 miles deposited in their account before June 30. Capital One miles are worth one cent each as statement credits towards travel reservations — including airfare, hotels, car rentals and cruises. According to Capital One spokesperson Sukhi Sahni, “Capital One is trying to expand our relationship with our existing cardholders and build on our brand equity.”
Those who are not current cardholders can still earn the bonus miles by applying for a new card and then applying for a mortgage during the eligible time period, according to the details of the promotion. However, be aware that applying for new credit before you apply for a mortgage can potentially be a bad move. The credit inquiry could cause a small drop (but a possibly significant one, depending on your situation) in your credit score. So proceed with caution when considering this particular tactic.
Is This Worth It?
A thousand dollars’ worth of rewards is a significant amount, but it probably shouldn’t be the deciding factor when applying for a mortgage. In fact, a home mortgage is likely to be the largest personal financial transaction that most of us ever conduct, so it is important to look for the best deal possible with the tens, or hundreds of thousands of dollars at stake, rather than focus on just $1,000 worth of rewards. Therefore, this promotion seems designed to encourage cardholders to at least consider getting their mortgage from Capital One, and it is always worthwhile to shop around for the best deal from various lenders.
How Card Issuers Are Expanding Their Offerings
Companies that are known primarily for their credit cards are increasingly looking to attract interest from their customer base for their other banking products. For example, in 2012 Capital One acquired the U.S. banking arm of the Dutch financial services company ING Direct, making it one of the largest banks in the United States. Capital One now offers checking and savings accounts under the Capital One 360 brand.
In 2013, Barclays Bank, a major credit card issuer, began offering savings accounts and CDs, although it does not currently offer checking accounts. Discover is another major credit card issuer that also offers retail banking — including savings and checking accounts, money market accounts, CDs and IRA CDs. With just a single branch in Greenwood, Del., Discover will serve as an online bank for the majority of customers. Finally, American Express Bank offers savings accounts as well as CDs.
With credit cards remaining a highly profitable business, it makes even more sense that retail banks are trying to grab a larger share of the market. For example, banking giant Wells Fargo announced a major expansion of its credit card line, with a focus on existing banking customers. As part of this expansion, Wells Fargo has partnered with American Express to issue cards in the payment network later in 2014.
Should Cardholders Seek Banking Services From Their Credit Card Issuer?
While the banks tap their existing customers for new accounts, what’s in it for consumers? One benefit is that those who hold a credit card account with the same institution that they bank with can have an easier time managing their money. For instance, they only need to log into one website in order to view all of their accounts, and making a credit card payment becomes a matter of simply transferring money between accounts, not institutions. It’s also possible that their credit card issuer can offer more competitive rates than they might have found elsewhere.
On the other hand, customers users who are enticed to apply for their retail bank’s credit card, rather than shop around for the most competitive products, may miss out on finding the best card for their needs. As credit card issuers and retail banks continue to offer the same services, their customers need to make sure they are still shopping for the most competitive products.
Lastly, you should never apply for more credit than you need. Too many inquiries on your credit reports can have a negative effect on your credit scores, and can make you a less desirable mortgage candidate, especially if you apply for other credit immediately before you apply for your loan. Before you apply for a mortgage, you should check your credit reports (which you can do for free every year) for errors or negative items so you can spot opportunities to build your credit. You should also monitor your credit scores regularly, which you can do for free using a tool like Credit.com’s Credit Report Card, to check for unexpected changes, and to know whether you’re likely to meet a lender’s requirements.
More on Credit Cards:
- The Credit.com Credit Card Learning Center
- How to Lower Your Credit Card Interest Rates
- 6 Smart Credit Card Strategies
- How Secured Cards Can Help Build Credit
- Tips for Paying Off Credit Card Debt
- How to Get a Credit Card With Bad Credit
At publishing time, Capital One products are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment.