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BofA unveils targeted deals

By Janna Herron ·
Wednesday, January 25, 2012
Posted: 12 pm ET

Bank of America is joining a handful of credit card issuers that offer retailer discounts based on your past purchases.

The national bank said it's testing the new program on employees in Nevada, North Carolina and South Carolina, according to a report in The Washington Post. By the middle of next month, it plans to roll out the program to all its employees nationwide.

The discounts, dubbed BankAmeriDeals, work like this.

Say you buy a new dog crate at a local pet supplies store with your Bank of America debit or credit card. The next time you log in to your account online, you find an offer for 10 percent off your next purchase at that store or a local competitor. To accept the discount, simply click it and the discount is loaded onto your card.

The next time you walk into the store, you will automatically get 10 percent off at checkout when you use your Bank of America card.

It sounds pretty convenient. Other issuers such as Wells Fargo, Citi, USAA and Discover also have similar programs in place.

A study by the Aite Group last year found that banks are turning to these so-called merchant-funded incentives to replace lost revenue streams from caps on certain types of fees. The good news is the money that banks recoup are coming from retailers and not from your pockets.

The group estimates banks will generate $1.7 billion from these retailer discounts by 2015. That's up from a paltry $100 million in 2010.

So, expect the trend to grow. Only 51 million credit, debit and prepaid cardholders received one of these offers in 2010. But by 2015, 467 million cardholders should get one, the Aite Group says.

Of course, this does bring up some privacy concerns as banks look closely at your shopping habits and possibly share that information with their partner retailers. But, in most cases, a consumer can opt out of the practice and receive generic discounts rather than targeted ones based on your last trip to the mall.

Bank of America will offer the opt-out option, according the article. It expects customers will get 16 to 20 deal opportunities per month, with the most frequent users of the deals possibly getting more.

Do you mind if your card issuer tracks your purchases to offer better discounts?

Follow me on Twitter: @JannaHerron.

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