Personal Finance: Now appearing: New credit, debit-card deals

WASHINGTON (Reuters) - Now being laid out on the table by some major U.S. banks: new consumer-friendly credit- and debit-card deals.

Seen not only as a way to stay a half step ahead of an angry mob, but also in light of new federal regulations banks are facing. Either way, some of the new offers are worth considering.

In recent weeks, Bank of America Corp, JPMorgan Chase & Co and Wells Fargo & Co, all have created new checking account policies designed to limit overdraft fees that debit-card users have been facing. Bank of America has also introduced a new credit card aimed at simplifying and limiting fees and interest charges.

Chase recently unveiled a "Blueprint" program for credit-card holders. It allows customers to pay off some charges, such as groceries and gasoline, every month without incurring a finance charge, even if they are carrying a balance and paying interest on other categories. The card also offers some budgeting tools.

Before getting into the details or giving the banks too much credit, it is worth noting that these incremental improvements are not strictly voluntary. Banks and other card issuers are facing new regulations, angry lawmakers and angrier consumers -- like the guy who recently filed suit against Bank of America asking for "1,784 billion, trillion dollars" because he felt wronged by its customer service department.

Sen. Chris Dodd (D-Conn.), chairman of the Senate Banking Committee, is pushing legislation that would allow customers to decline overdraft protection, and other rules set to take effect over the next year will probably force most card issuers to rethink the way they do business.

Consumers should begin that rethinking process now, and continue it for more than a year. Anyone who is sticking with the one credit card (or debit card) already in their wallet simply out of habit should recheck that account's policies and see if there may be something better out there. Here are some tips for checking out the new products:

-- Hold out for something better. It's smart to opt out of the costly kind of "overdraft protection" many banks offer debit-card users. That protection simply means they will honor transactions that overdraw your checking account, and then charge you a heavy penalty (as high as $35 or more) for every overdraft. There are many stories of consumers piling up more than $100 in overdraft charges in a single day after using a debit card multiple times for small items like a pack of gum, a newspaper or a cup of coffee.

So, the debit-card dependent should opt out of this kind of protection. It would be better if they could get the bank to offer traditional overdraft protection in the form of a low-interest line of credit. If they have a good credit score, they should be able to get that. Alternatively, disciplined spenders with good credit scores should just charge their everyday purchases on a cash-rewards card they pay off once a month from their checking account.

-- Work the angles. Chase's new Blueprint plan does offer real value to consumers. It's not so much in the card's budgeting tools, because there are many debt-reduction tools online that allow cardholders to do their own debt-payoff plans. And it is not so much in the ability to segregate some charges for quicker payoff and others for slower payoff. If those charges are all being carried at the same interest rate, that distinction is more psychological than financial. But the Chase card allows you to choose categories that would get an interest-free grace period for the first month that they appear on the statement.

If you pay the charges from those categories in full, you will not incur interest on them. Best strategy? Put all of your categories on that list. In a worst case scenario, you would not be able to pay them all off at once, and Chase will go back and charge you interest on the amount you didn't pay. That's no worse than simply charging them without a grace period in the first place.

-- Do not choose simple over smart. The new Bank of America card, called Americard, promises to strip a credit card to its bare essentials. It will not charge over-limit fees and it will command the same rate of interest on all charges, including cash advances, purchases and balance transfers. It will not charge punitive interest rates. That's all good, but its rate will be a variable one, set at prime plus 14 percentage points. Today, that puts the rate at 17.25 percent. For anyone with a good credit score, that's a pricey card.

-- Keep looking for something better. Folks who have good credit scores should constantly monitor their own cards and checking accounts to see if the policies and fees are working for them. They can look at sites such asbankrate.com, indexcreditcards.com, lowcards.com or cardratings.com to see the latest offers from Washington-wary bankers. They may find something better than what they already have.

(Editing by Maureen Bavdek)