Banks Make Millions Selling Your Shopping Habits

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Banks have another idea to make money – and strangely enough, this new tactic might even save you a few bucks.

By now, you’re probably familiar with local discount-of-the-day sites like LivingSocial, Groupon, and their many imitators. You may even subscribe to a few and get regular deals from your city sent to your inbox and your phone.

Guess what? Banks are ready to get in on the action and offer you some bargains too. But here’s the really interesting part: They don’t need to target you by vague geography. By virtue of your credit and debit card purchases, they have insider info – like where you shop, how much you spend, and how often.

No, they aren’t exactly selling your personal shopping details. But through third parties, they’re starting to partner with retailers to offer you deals based on your purchase history.  For example, if you regularly pay with plastic at Walgreens, your bank might partner with Rite-Aid and include a 20-percent-off coupon on your online credit card statement. You get a discount for trying a new drug store, the bank gets a commission from Rite-Aid for every coupon that gets used.

It’s a potentially lucrative business: By 2015, banks could be raking in up to $1.7 billion a year by helping merchants target shoppers, according to Boston-based research firm Aite Group. They also believe this kind of “merchant-funded incentive” could replace traditional debit and credit card rewards programs.

Learn more from Money Talks News founder Stacy Johnson in the 90-second video below. Check it out, and then read on…

As Stacy mentioned, these new programs could lead to some appealing offers as merchants partnering with the bank compete for your business. But with this tactic is still in its infancy – Wells Fargo, Citibank, and Discover have already launched programs, and others will follow this fall, according to CNN – there are bound to be unanswered questions.

For instance, merchants might set restrictions on these deals (like minimum purchase or brand-specific requirements) and consumers could make a purchase assuming they will get a discount or credit that doesn’t show up on their credit card statement. Should that happen, who do they take it up with: the store, the bank, or the third party company that acts as the middleman? How do people concerned about their privacy opt out? (You are “opted-in” by default.)

If banks do uncover a new revenue stream by using your personal shopping information to offer customized deals, it could be win/win. With a new source of income, banks might feel less pressure to raise fees fees for services like checking accounts. And you save money  with discounts and other offers.

But forgive us if we’re a little skeptical. Given how banks handled the swipe fee issue by raising consumer fees months before the new rules even went into effect, we take any new sources of bank revenue and consumer “benefit” with a rather large grain of salt.

If you’ve been thinking of shopping for a new banking relationship, here’s a quick primer:

  1. Look locally, not nationally. Big banks have more overhead, more investors, and more levels of management that separate them from the average consumer. Smaller local banks may offer better deals, especially as they try to lure away megabank customers and establish themselves.
  2. Check out credit unions. Even better, turn to a nonprofit, community-based financial service. They generally have better savings and loan rates and charge lower fees. You may be eligible to join a local credit union through your job, or based on the community you live in. Look them up at the Credit Union National Association and compare fees. If you’re worried about access or the number of locations, remember that many credit unions, unlike banks, share branches with each other. See if yours does at
  3. Break the news to your bank. Let your bank know you’re ready to walk out on them over crazy fees and see what they offer. You might even bring in a comparison of your new institution’s fees compared to theirs. Until you leave, you have some leverage and might work something out. Big banks are never going to care more about you than when you’re about to leave.
  4. Get a switch kit. Your new bank or credit union probably has a package of paperwork you’ll need to transfer your direct deposit and tell your debtors that your money moved. At a credit union, they may even offer to do this paperwork for you. For free.

That should get things rolling, but don’t fully cash out and close down your old account immediately: Wait and make sure everything is going smoothly and that money’s going where it’s supposed to, so you don’t get hit with any more frustrating fees.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,990 more deals!