Chase Blueprint – good or bad?

When I started reading about Chase Blueprint, I thought I had finally found something Chase had done right.  Blueprint is what Chase calls a financial management tool that is attached to a subset of their credit cards and allows card holders to create plans for paying off various things they have charged on their credit card.  There is no additional charge for using Blueprint.

But, like most things with Chase, I decided to dig a little deeper and see if there was anything fishy behind it, and there was.

The first thing that struck me odd was the fact that Blueprint is being presented by Chase as a financial management tool.  Hey, that’s great, I am all for people learning how to manage their money better.  When it comes to your money, there are two main things you can do with it, save it or spend it.  Well, Blueprint fails overall as a financial management tool because in order to manage your finances with Blueprint, you have to first spend your money, which, isn’t exactly one of the cornerstone principles of good personal financial management.

When you spend money, you can either spend money you have, or money you don’t have.  One of the whole premises behind Blueprint is that it help you break up your credit card bills into subsets of spending so that you can make plans to pay off various things in various time frames, all the while happily paying interest to Chase.  Because it only applies to the spending of money you don’t have, once again it fails as a good financial management tool.

What is Blueprint really for?

1. To make people feel more comfortable keeping balances for longer periods of time.
2. To help Chase customers who tend to rack up large balances on their credit cards be more diligent about paying it ALL off eventually.

Yes, it is a tool to help Chase get people to hold onto their balances longer, and be more likely to pay them off eventually.  Yes, it is a tool that primarily benefits Chase.  On the one hand, you have to give Chase credit; Blueprint does make good business sense for them.

Ok, so, big deal, it benefits Chase.  It’s free anyways, so who cares.  Right?  Wrong.  The Blueprint service only applies to a subset of Chase credit cards, the Platinum, Slate, Freedom, Sapphire, and Chase business cards.  Almost all of these cards have much higher APR’s or an annual fee than other cards many customers have from one of the many institutions that Chase has acquired over the last five or more years.  The majority of the cards that have Blueprint have a VERY HIGH initial APR if you have only average credit scores.  You would have to have PERFECT credit scores to get the lowest advertised APR of around 13% on most of these cards, which itself is not a very good rate anyways.  And if your credit score goes down for some reason (for instance because Chase lowers your credit limit on another card) they can move you to a higher interest rate despite the new rules in the Credit Card Act of 2009, because the tiered interest rate is built into most of these cards from the start.

So, in order to benefit from Blueprint many Chase customers would have to switch to a higher cost card.

If you really want a tool that improves your ability to manage your finances, try one of the great online personal financial management tools like GreenSherpa, a service that allows you to aggregate financial information from not just your credit card, but your bank and other accounts as well, all in one place.  You are much more likely to practice proactive financial management (i.e. BEFORE you spend) with a tool like GreenSherpa than with Blueprint.

Also, read the book Your Money or Your Life to get a handle on what you spend your money on and why.

DO NOT GO INTO THE LIGHT!

Just a not-so-subtle reminder, that when Chase contacts you, either by email, letter, or phone, to warn you that you will be at risk if you don’t sign up for overdraft protection, JUST SAY NO!  The only ones that win when consumers have debit-card overdraft protection are banks, to the tune of $38 Billion industry-wide per year.  If you don’t have it, you pay nothing as when you try to use your debit card and have no funds, it won’t work (which is how most people think it is supposed to work).

If you don’t believe me, just listen to a bunch of consumers groups say the same thing.

Chase aims to cherry-pick best business customers

We all know that Chase has been slashing and burning its customer base, especially among small-business customers, who often finance their operations in the short term with credit cards.

Well, Chase is showing again that rather than being a community bank that is committed to fair and reasonable lending practices, it is only looking to cherry-pick the creme of the crop of customers.  At least, that is how Bloomberg Business Week sees it.  Their latest volley, a seemingly innocuous promotion that offers companies a reduction in interest rate on credit lines for hiring new employees.  Business Week thinks they are trying to attract the best strong (financially speaking) customers from other banks.  I read it a little differently.  Perhaps they are trying to identify which of their current customers they want to hold onto, or conversely, which additional customers they will motivate to leave them.

Chase vs BofA for overdraft protection

This interesting article in the Chicago Tribune highlights the differences between the Chase and BofA overdraft protection programs moving forward.

Chase, on the one hand, has chosen to use fear to try and cajole its customers into voluntarily signing up for overdraft protection, which they will be prohibited by law from automatically enabling in new accounts (without telling customers about it).  They continue to send repeated ominous sounding letters to customers that have not yet opted-in.

Bank of America, in stark contrast, chose the high road and has discontinued its overdraft protection program altogether, based on popular opinion (and common sense):

“We’re responding to the overwhelming majority of customers who say, ‘Don’t let me spend money I don’t have,'” BofA spokeswoman Diane Wagner said.

Becoming a better bank customer

It has been quite an education blogging on the badness of Washington Mutual and Chase Bank over the last five years.  I am amazed at the number of negative experiences, pitfalls, and amount of bad behavior of those two banks.  While many banks seem to have a business model based more on tricking you than serving you, the success of that model depends heavily on the ignorance of consumers and their continued tendency to make uninformed and simply bad choices.

An article in the Wall Street Journal yesterday (The New Bank Fees: How to Fight Back) tells us what is on the horizon:  More fees whose details are not spelled out prominently, but hidden in the mundane paperwork we receive from from our banks.

The sad thing is, going from bank victim to savvy customer is not that difficult.

The first and foremost thing you can do to become a better bank customer is to read everything you get from your bank.  Personally, I scan and save copies of all paperwork I receive, including and especially that paperwork which spells out the terms and conditions of my account.  This allows me to not only know what conditions I am bound by, but also see how they’ve changed over time.  Reading my bank paperwork can easily catch changes in minimum required payment, due date, and interest rate, all things that can trip customers up.  Reading over all of your paperwork also includes reviewing all charges on your account to identify possible fraud early and contacting your bank if you see anything that doesn’t look right.

Second, know what your options are.  If your bank is treating you like they don’t really value you as a customer, shop around for a better alternative.  If you bank with one of the big banks like Chase, try looking at credit unions, which Consumer Reports says are a better choice for most banking needs, including and especially credit cards.  Services like bankrate.com do a pretty good job of comparing different banks and credit card companies making it easy for you to find the best deal.

Lastly, come on people, stop borrowing more than you can afford to pay back.  That is not the way to financial freedom and becoming too debt heavy causes stress and reduces your ability to easily switch banks and credit card companies to get a better deal.  If you use a credit card, only spend as much on it as you can afford to pay off every month.

Is Chase getting desperate about losing its overdraft fee income?

Buried in a comment to this post about Chase’s letters asking customers to opt-in to overdraft protection (now that they have to have customers opt in) is an interesting comment:

Either way, Hubby and I have been inundated with mail from them about this. I’m not joking when I say we’ve received over 10 separate letters from Chase about it. Talk about killing trees. We are likely switching banks soon.

Ten separate letters?  Now if that doesn’t sound like desperation …

The credit card roller coaster

This story is truly a product of the times we are in right now, with most credit card issuers desperately trying to put a stop loss on the massive credit liability they created in the last decade or two.  Unfortunately, many good customers are getting caught in the cross hairs.

Like this one.

First his Capital One credit card was closed due to not being used enough.  This caused his credit rating to drop such that Chase decided he was a greater credit risk and they gave his credit limit a severe haircut and raise his interest rate.

Chase says to customer, go somewhere else

Well, they might as well have.  Found this recently in response to a post about Chase:

I have perfect credit and when I went t get a loan for a car I only needed 3k because I had the rest saved up..well after being drilled about the year make and model (which they said I couldn’t get one older than 2006 or they would not loan) they said I had to borrow a minimum of $7000 and there will be penalties if I paid it off before a certain amount of years, that was very ridiculous.

Wow, Chase sure has a lot of rules for a simple car loan.  It just begs the question, do they really want customers?