Will Banks Treat You Better in 2012?

Banks have earned the ire of millions of Americans over the past several years. Ever since the mortgage meltdown and the ensuing financial crisis that it caused, Wall Street banks have been the logical scapegoat for economic woes around the world. And with banks having received billions in taxpayer aid, many customers think it's about time that the banks gave something back.

Yet even if you haven't seen your bank offer you a bailout, some banks appear to be making moves to woo customers back into the fold. Although the deals unquestionably benefit the banks, the more important question for you is whether they mean that you'll get better treatment from your bank this year.

What banks are doing
In two areas in particular, banks are pulling out the stops in an effort to boost their bottom lines. One is to offer new credit cards to borrowers with less than perfect credit. According to a research firm, credit card issuers sent more than twice as many card invitations to borrowers with subprime credit ratings during the first nine months of 2011 than they did in the same period in 2010.

Capital One (NYS: COF) , for instance, has made a big move toward serving customers with credit risks, offering its Next Card to 1.9 million households. The card starts out with a relatively high interest rate but offers the chance to cut that rate by 8 percentage points or more after a year of on-time payment history. Similarly, Citigroup (NYS: C) has expanded its credit-score guidelines on its Simplicity card, for the first time offering it to borrowers with scores below 700.

The other way some banks are drumming up new business is on mortgage refinancing. With rates at record lows, eligible borrowers have plenty of incentive to refinance. But with closing-related expenses and fees typically costing you thousands of dollars, some banks have started offering big discounts on those costs. Valley National Bancorp (NYS: VLY) , for instance, charges just $499 in closing costs on mortgages as big as $1 million. Other banks are offering outsized "jumbo" loans once again, expanding limits that fell sharply during the financial crisis without the surcharges that some required previously.

According to TheWall Street Journal, this is more of a small-bank phenomenon, with few big banks joining the discounting craze. But even without discounts, larger institutions still offer rock-bottom rates. And with Bank of America (NYS: BAC) still smarting from its failed attempt to raise revenue from debit cards -- a move that many peers, including Regions Financial, had decided to mimic and then withdrew as well -- trying to pull in customers on the mortgage front may do a lot to lessen the long-term reputational damage.

Get the deals you deserve
For millions of customers, though, the damage has been done -- at least for now. Efforts like Bank Transfer Day have led thousands of customers to move away from big banks toward credit unions and other local institutions.

But as Fool analyst Morgan Housel noted, there's a reason that big banks draw customers. They're often more convenient and have more locations than smaller institutions. It's not surprising that credit unions and small banks can draw customers away from hated larger banks, but the real test is whether those smaller institutions can keep those customers -- or whether they'll end up defecting back to Wall Street's finest in order to grab the latest perk.

Regardless of your views on big banks versus small banks, the key right now is to understand that the ball is in your court. Banks want to make money off you, and that puts you in the driver's seat to take advantage of great offers on credit cards, mortgages, and other banking products. So don't waste the opportunity -- seize it while it lasts.

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At the time thisarticle was published Fool contributor Dan Caplinger always wants financial institutions to treat us all better. He doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of Bank of America and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy crushes the competition.

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