There’s a brand-new credit card in town, and it wishes to provide you a helping hand. Bank of America introduced the BankAmericard Better Balance Rewards card earlier this month.
Here’s how it works: You can make $25 in cash benefits each quarter if you make your payment on time and pay more than the needed minimum payment.
So, for a three-month duration, if you pay an amount that exceeds your minimum necessary payment each month, you can earn up until $100 annually. If you’ve even more than one qualified account with Bank of America, then you get an extra $5 each quarter, meanings you can earn approximately $120 a year.
This Isn’t the First Bank card With Good Intentions
This Bank of America card takes a pretty unique technique by rewarding customers who pay even more than the minimal payment. But it isn’t the first card to wish to offer you a big caress.
The Discover Motiva Card and the Citi Forward Card enter your mind. Discover doesn’t advertise the Motiva Card, but you can still discover it online if you look hard enough. This card offers you back 5 % of your monthly interest charges as a Cashback Incentive.
The Citi Forward Card isn’t available, unless you’re a college student. This card reduces your interest rate up to 2 % if you pay your bill on time and stay under your credit limitation.
Then we’ve the Citi Simplicity and the Discover it Card. These cards desire you to understand that if you make a mistake, they’ll still enjoy you. Well, the Discover it Card will still love you after one late payment. But make another mistake, and you’re in the doghouse with a late fee.
Are These Credit Cards Helpful for Consumers?
I’m actually amazed with the feedback to the BankAmericard Better Balance Benefits card. Some customer supporters and professionals have actually stated cards like this encourage reckless habits. With the Bank of America card, the argument would be that it motivates customers to hold a balance.
With the Citi Simpleness and the Discover it Card, the issue is that it urges individuals to get lazy about paying on time. I can see both sides of this argument. It’d be a little too simple to unwind about your payment if you think there isn’t any punishment.
But if the late payment is reported to the credit bureaus, your credit score gets penalized. I haven’t seen anything in the fine print that guarantees you won’t be stated to the credit bureaus if you make a late payment. And because this likewise suggests you’re carrying a balance, there’s that irritating compound-interest thing to worry about.
But let’s have a look at the other side of this argument. Exactly what if you all of a sudden lose your job, your young girl just got braces, and your automobile needs new tires? Your cash flow this month is shaky, so you capitalize on the window to pay a little late. In a case like this, the ‘forgiving’ credit card doesn’t intend to alter your payment habits. It’s just there as a security internet to catch you if you all of a sudden fall.
Not Everyone Who Carries a Balance Is Irresponsible
OK, so this brings me to an additional point. Not just does the media tend to focus on the unfavorable side, however they occasionally suggest that those who hold a balance are untrustworthy. See, I don’t think that’s fair.
Sure, there are lots of people who’re in credit card debt since they’re reckless. But in my experience, these individuals typically ‘have up’ to it when they realize what they’ve done.
But all of us need to keep in mind that there’s an additional segment of the population that’s still in trouble from the economic crisis. These people are using their cards to pay the rent and the grocery expense. And to purchase their kid shoes.
The post-recession world we’re experiencing now is a little different from what we’ve seen before when an economic downturn ends. Even if all the economic indicators point to recuperation, the dark days aren’t immediately over for everyone.
How the Bank Benefits
I make a living keeping my eye on the banks and their items. So think me, I do see how these cards benefit the banks. The extra $5 that consumers get if they’ve more than one Bank of America account? Clearly, Bank of America is motivating consumers to open more accounts. However I don’t see anything deceptive about their strategy. Bank of America is trying to increase consumer loyalty, which all for-profit companies do. If you don’t need another account, don’t open one.
And, of course, when customers pay late, the banks still make money online from interest even if they give up the late fee. However let’s drill down to the primary question – do these credit cards assist any group of consumers? My answer is of course, they do. So whether the bank perks doesn’t concern me, unless of course, they use deceptive techniques.
So what do you think? Do you think credit cards that reward good behavior are useful? Or do you think they encourage bad behavior?