banktime.com

Call the presses – the banks of the United States are all trying to play nice.

If you wander into a consumer bank branch or look into opening a credit card lately, you might just be bowled over by the apparent generosity of these institutions. Cash bonuses for new accounts opened, generous offers to waive or refund interest under certain situations – the banking world is a consumer’s oyster right now.

Or at least, that’s what they want us to think.

Let’s be perfectly honest here. No matter how generous banks’ offers might be, their motives are never fully altruistic. Banks are coloring these policies as their own ways of chipping in and helping out during these really hard financial times when virtually everyone is struggling to stay afloat. But honestly, they just really want your business. And banks and credit card lenders don’t make money on you unless you screw up (overdraw your account, make your payment late, run up the balance too high, et cetera). You draw the conclusion from there.

These initiatives are all part of a simultaneous campaign from the biggest card companies in the U.S. to show consumers that their bank is really their pal. Banks certainly need the good publicity, in an age where predatory practices, raised interest rates, massive executive bonuses, and clamped-down credit availability are all anyone ever hears about. The Washington Post ran a story recently on Chase Bank (the current biggest issue of credit cards in the whole country) and their roll-out of the Chase Blueprint program, which is available to the approximately twenty million users of Chase Freedom, Ink, Sapphire, and Slate credit cards. Tailored to an America in which people are having to use plastic for purchases they’d never thought to make in past times – groceries, utilities, medications, gas, and other needs – the program allows consumers to choose from a list of everyday expenses to pick the class of purchases on which they’d like to have their interest charges waived in exchange for paying those purchases off in full every month. The offer stands even if the consumer carries a balance from other purchases, which is truly innovative.

Nor is Chase alone in their quest to woo their customers over to believing that credit card companies are not the predators they have been made out to be. Citibank, a close competitor of Chase’s, has launched its branded Forward card through which consumers interest rates are lowered by a quarter of a percentage point when card users stay under their credit limit and pay their bill on time for three consecutive months. In that same vein, the Discover Motiva card pays back one month of interest to consumers after six consecutive months of on-time payments. These cards all provide incentives for customers to pay their bills on time, which Americans are proving to have more and more trouble doing. (The national delinquency rate remains over six percent.)

When you consider how downright impersonal these companies’ strategies were in the past – the Washington Post described them as “cold-blooded” – these policies and programs do seem quite a bit warmer and more considerate of the people who behind credit card issuers’ massive profits. But let there be no mistake. These companies remain primarily interested in keeping customers and making money during a time when their very way of life is being threatened. The CARD Act marks a complete upheaval in the American credit card industry and the way that things are done. When faced with the risk of having millions of cardholders defect, stop using plastic, or start using their cards more responsibly rather than go bankrupt – heavens forbid! – card companies are naturally pulling out all of the stops. It’s not really that much of a “nice” gesture as a practical one.

You have probably noticed that almost all of these initiatives are aimed at getting cardholders to pay off their debts more responsibly. By giving rewards to cardholders for making their minimum payment every month, card companies are not truly doing anything for their customers so much as for themselves. A customer who makes room on their credit card by paying down the balance every month leaves more room for new charges, the lifeblood of the credit card business. And in this economy, it is very likely that credit card users will find something else to charge. Even if credit card companies take a little bit of a hit on the interest charges, it is far replaced by the money they will make on these customers’ continued business. Also, a customer who feel empowered and is given incentives to pay their bill is definitely one who is less likely to give up and stop paying their bill entirely as so many credit card users (a ten percent national average) are doing. It’s all strictly smart business.

On that same note, many credit card companies and banks have been launching tools on the World Wide Web that are supposedly designed to help their customers start saving money and paying down their debt. But don’t get anything confused here – credit card companies’ primary motivations are and will always be getting you to spend money, not to save it. (Because, after all, they don’t make any money if you aren’t spending it!) When you walk into your local bank and they offer a one hundred or two hundred dollar gift card in exchange for opening a checking or savings account, for instance, make sure for your own good that you read the fine print on the offer. Oftentimes, consumers will be required to set up direct deposit to the new account and maintain a high minimum balance in order to not lose the “free” money. There is really no such thing as a free lunch after all, and that saying is never truer than when it applies to banks and credit card companies. Don’t get me wrong – it’s nice to see any sign of humanity coming from banks, but it’s so important to always keep the ultimate motivation of these big corporations in mind so that you don’t let yourself get fleeced.