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SHAPE OF THINGS TO COME
From the June 2003 Issue of CardTrak

The U.S. credit card market is so saturated you have to do something crazy to get your card noticed. Over the past twelve months some issuers have gone beyond 0% interest rates and reward programs to tinkering with the physical shape or look of the card. Last month, Capital One launched a series of translucent credit cards promoted as "See-Through Designs." The new cards are available in seven see-through colors including amber, blue, gray, green, orange, purple, and red. American Express was the first major U.S. issuer to adopt the translucent card design with the 1999 introduction of its "Blue" smart card. Last fall, Bank of America launched its "mini VISA," which is half the size of a regular credit card and can be attached to a key chain. Last spring, Discover launched a unique oval shaped credit card. The Discover "2GO Card" is housed in a protective case that attaches to a key chain, belt, or money clip. Users simply rotate the card out of its case and swipe. The card shape craze has also spread overseas. Last month, Virgin launched a new MasterCard in Australia that is slightly misshaped.

CHEAPER MAIL

The sixth largest bank credit card issuer, and the largest producer of First-Class mail, has struck an unprecedented deal with the U.S. Postal Service to cut postage costs. The three-year "Negotiated Service Agreement" between the U.S. Postal Service and Capital One was approved this month by the Postal Rate Commission. Under terms of the proposed deal, Capital One will receive volume discounts between 3 cents and 6 cents per piece, depending on mail volume. The deal caps the discount at $40.6 million for the three year term. The proposed agreement also requires Capital One to receive address corrections electronically instead of having undeliverable mail returned. Capital One mails out more than 1.2 billion pieces of mail annually.

BUSINESS EXTRAA CARD

American Airlines and American Express have teamed to issue a co-branded corporate card for mid-sized companies this fall. The "American Express Business ExtrAA Corporate Card" will offer a quarterly cash rebate on airline tickets and a points program for all AA-related card purchases. Companies will be able to earn up to a 10% quarterly cash rebate on first, business, or full coach American Airlines tickets charged to the card. Discounted leisure fares do not qualify. Companies will also be enrolled automatically as members in American's "Business ExtrAA" program and earn points for total spending with American on the Card. Points can be redeemed for free tickets, upgrades, and "Admirals Club" memberships. AmEx and AA said a typical mid-sized company that charges $100,000 of travel on American to the new card can save as much as $10,000 annually, plus earn as many as 12 free tickets per year. American Airlines has a long-standing co-branded credit/debit bank card relationship with Citibank.

BLUE SUMMER MUSIC

American Express and Infinity Broadcasting is launching the "Blue for Save The Music Amplify Tomorrow" tour with fundraising events in New York, Los Angeles, Chicago, Boston and San Francisco through the summer. Many events will be hosted at concert venues by station DJs, and will feature music performances by some of the industry's hottest talent. Infinity Stations will provide a series of on-air promotions and specialty programs. Onsite at the events, concert attendees will be encouraged to visit the "Amplify Tomorrow" school bus and stage experience, where they can purchase raffle tickets for music instruments and memorabilia signed by famous artists. In addition, funds will be raised through special ticket packages for concerts and exclusive showcases.

BOX TOPS

General Mills reported this month that its "Box Tops for Education" program produced $23 million this school year for the 77,000 schools enrolled in the program. Besides the "Box Tops" coupons which appear on over 800 brands of grocery items, General Mills and Bank One also offer the"Box Tops VISA" which delivers a full 1% of every purchase to a designated "Box Tops" school, up to a maximum of $20,000 per school annually. Bank One and General Mills launched the card in November 2001. General Mills launched the "Box Tops for Education" program in 1996, and has raised more than $90 million for America's schools. More than half of American homes with children participate in the original "Box Tops for Education" clipping program.

BUSINESS REWARDS

SouthTrust Bank has launched a "Rewards VISA for Business" credit card that offers redemption levels as low as 2,500 points for merchant and travel certificates. "SouthTrust Rewards VISA for Business" cardholders will earn points redeemable for air travel, hotel and car rental certificates, and merchant certificates with every purchase they make. More than 22 nationally known merchants -- including Pottery Barn, TJ Maxx, Marriott International, Hertz and Ruth's Chris Steakhouse-offer products and services as rewards.

BA CARD

Bank One and British Airways have extended their co-branding relationship until March 2009. Bank One took over the BA co-branded credit card program in 1998 after it was dumped by Chase. The "British Airways VISA Signature Card" features no limit to the number of miles earned from purchases and 10,000 bonus miles with the first purchase transaction. The card also offers a complimentary companion ticket when a ticket in business class or higher is purchased with the "BA VISA Signature" card, until March 31, 2004. Cardholders earn one mile for every US$1 in purchases, and two miles for every US$1 of British Airways purchases. The card carries a $75 annual fee. Bank One offers a 4.9% five-month intro rate followed by a variable prime +8.49% APR. Bank One also issues the United Airlines Mileage Plus card, its largest co-branded airline program.

GIFT CARDS 2002

A new survey on gift card purchasers and users shows that middle income families and high income professionals are the primary gift card buyers, accounting for 60% of gift card purchases as a whole. The study also found that the average dollar value of purchased gift cards last year, among all consumers, is $50. However, adults 65 and older maintain the highest average dollar value when purchasing cards, $77. The ValueLink/Omnibus survey of more than 1,200 consumers aged 18 or older also found that males were more likely to load higher dollar amounts on their purchased cards, $58 versus $45 for females. Males also received more cards than females in 2002, 31% and 28%, respectively. Approximately 70% of gift card buyers fall between the ages of 25 and 54, most are married with children, and are full-time employees with some level of college education.

SAFE REPORT

State Farm's "The State of America's Financial Education" study has found that the vast majority of young adults are doing okay financially (70%) and are optimistic about their financial future (69%). Yet, less than one-quarter of young adults (24%) claim to have a good understanding of how to invest in the stock market or mutual funds and only one-third (33%) feel comfortable taking financial risks if there is a possibility of gain. Less than half pay off their credit card every month and have a rainy day fund. State Farm's report also found that young adults have some of the basics of personal finance in hand. Approximately two-thirds balance their checkbooks regularly, 61% save money on a regular basis, 60% follow a budget, and a vast majority own "everyday" financial products (82% auto insurance, 81% checking accounts, 72% savings accounts, 72% health insurance, and 64% credit cards).

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