Banks Look to Draw Customers With Rewards

By Eileen A.J. Connelly, Personal Finance Writer

NEW YORK (AP) — Many consumers feel like they got the short end of the stick from their banks despite following all the rules. Soon they may be able to leverage their good behavior into some advantages.

Bankers are using buzzwords like "rebuilding trust" and "improving customer relationships" as they revamp products and try to regain their footing in the fledging recovery. But behind those soft words are some hard realities: the battered industry needs to find ways to grow without relying on acquisitions, hidden fees or risky products like subprime mortgages.

That gives some power to customers with strong credit histories and healthy balances. After a few years of feeling like they were punished for the sins of their irresponsible neighbors, these customers should find it possible to get some preferential treatment in exchange for their business.

That could mean talking banks into lower interest rates on credit cards or loans; or waiving fees for checking accounts, using online banking or out-of-network ATMs. Having multiple accounts with the same bank will increase bargaining power, because banks want to nurture those customers to do more even more business.

"Their goal is to get as many different relationships with you as possible," said John Ulzheimer, consumer education president for In exchange for a move such as transferring an Individual Retirement Account or taking out a new loan, you should be able to get some perks. "Horse-trading is something that bank customers should feel comfortable doing."

It's not just the economic meltdown that put banks in this spot. "The financial crisis provides dramatic backdrop. But that's not the fundamental force at work," said Robert B. Hedges Jr., managing partner of financial services consulting firm Mercatus LLC.

Two broader factors have banks more focused on delivering for their customers, Hedges said. The first is the Internet, which makes it easy to search for more attractive deals and to move money between far-flung accounts. The second is that after a two-decade-long wave of consolidation, major banks can no longer count on growth through acquisition.

Regulation is also playing a role. The credit card law that took effect in February makes it harder to generate outsized profits by raising interest rates and charging multiple fees. New rules governing overdraft charges and the order in which checks are processed will also reduce income when they take effect in July.

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