Credit Card News
Casino Credit Card Makes Big Splash with Gamblers
The Arriva Card, a private-label credit card marketed to “prime” casino gamblers, announced earlier this week that it has signed up its first 1,000 cardholders and has seen $2.5 million in transactions in its first weeks of limited marketing. While the numbers are extremely modest by the standards of big credit card issuers, Arriva Card, Inc. says that its direct mail response rate is 1.36%, well above the industry standard of 0.3%, and that is targeting only the most credit-worthy customers. In addition, the company says the average cash advance on an Arriva Card is nearly twice as large as those done on non-Arriva credit cards.
While the appeal of using credit to fund gambling purchases is obvious, Arriva is understandably emphasizing a focus on good-credit customers and responsible gaming. Witness the statement from Todd Smith, vice president for card services at Global Cash Access, Inc., parent of Arriva Card, Inc.: “It’s very exciting to see how many experienced, responsible gaming customers with strong credit ratings have applied–and qualified–for an Arriva Card during the initial few weeks of our direct mail marketing effort. It really shows that savvy gaming customers know they don’t need to be penalized by traditional credit cards’ terms for cash advances and are eager to embrace an alternative that treats them better.”
Smith’s specific reference to cash advances is appropriate because the Arriva Card’s main selling point is that it offers better terms for these advances–which are what gamblers use to access more cash on the casino floor–than could be achieved through traditional credit cards. Arriva Card offers a grace period on cash advances, as well as a rewards program on cash advances. Most card companies offer no grace period on such advances, meaning cardholders begin paying interest immediately, and cash advance interest rates are usually significantly higher than rates on regular credit card purchases.
Arriva Card says it is accepted at over 700 gambling destinations. The card is not associated with a network such as MasterCard, Visa, American Express or Discover, so it can not be used as a general credit card for typical credit card purchases.
ESPN Credit Card Offers Unique Sports Rewards
TV sports channel ESPN has launched the ESPN Total Access Visa Card with the promise of unique sports rewards for cardholders. Rewards include sports tickets, apparel, collectibles and, perhaps, most enticing, VIP passes to professional sporting events–from game day access to an invitation to a VIP experience at ESPN’s ESPY awards.
ESPN Total Access cardholders will receive five points for every dollar spent on purchases made from ESPN and one point for every dollar spent everywhere else. The card is issued by Washington Mutual.
As part of the card’s launch, ESPN is sponsoring a “Make Your Picks” Sweepstakes that will allow one grand prize winner to choose five ESPN prizes, including travel, lodging, and total access to the chosen experiences. Prizes include VIP access to the 2007 ESPYs, the Winter X Games in Aspen, and a $1000 shopping spree on ESPNShop.com. The contest is open to all at www.ESPNMakeYourPicks.com.
Condo Developer Accepting American Express for Down-Payments
In perhaps the mother of all rewards points opportunities, American Express is piloting a program that allows condo buyers to charge down-payments on their American Express cards. American Express’ first partner in this venture is New York developer The Moinian Group, whose under-construction development The Atelier, on Manhattan’s Far West Side, is already accepting American Express for down-payments.
American Express introduced credit card acceptance for rental properties in 2003, and says that the success of that program was the catalyst for extending card acceptance to condo down payments.
American Express has not announced plans to roll out the program on a wider scale, although calling this a pilot would suggest that to be a potential next step. Card acceptance for down payments on other types of real estate has not been discussed, either.
New Travelocity Credit Card Promises Easier Point Redemption
Online travel site Travelocity has launched the Travelocity Rewards MasterCard, a rewards point credit card that it says offers easier redemptions than other travel credit cards. Cardholders receive double points on purchases at Travelocity and one point per dollar for purchases elsewhere. Points can be used for either free tickets or for direct cash discounts on flights.
Points can be redeemed online for travel on any airline, hotel, car rental company, or travel package available on Travelocity at any time, so no blackout dates or restrictions apply. In addition, Travelocity promises an easier redemption process, requesting any point redemptions within the general reservation process (similar to using a gift certificate) instead of requiring a special phone call or other process for redemptions.
Customers canb start redeeming at the 5,000-point level, with 5,000 points equalling a $50 discount. Discounts get higher as more points are redeemed, including:
- 20,000 points = A free flight worth up to $400, or $400 off travel package, hotel stays or car rentals
- 15,000 points = $200 credit
- 12,500 points = $150 credit
- 7,500 points = $100 credit
The Travelocity Rewards MasterCard is issued by Barclays Bank Delaware (formerly Juniper Bank).
Discover Card Acceptance to Increase with New Partnership
Discover Financial Services announced today an agreement with credit card processor Global Payments Inc. that should lead to increased merchant acceptance of Discover cards. Global Payments will begin selling Discover Network card acceptance to merchants and it also will purchase the portion of Discover’s merchant portfolio for which it currently provides Visa and MasterCard processing.
Like a similar agreement struck with processor First Data in July, the partnership means that merchants who use Global Payments services will have a more convenient path to accepting Discover credit cards. Most credit card processors offer MasterCard and Visa acceptance to new merchants at the same time. To accept Discover, on the other hand, merchants have to take the extra step of applying directly to Discover. (This is true of American Express as well.) Because Discover has fewer cards on the market than MasterCard or Visa, it is less likely that merchants will take the time to add Discover acceptance. With these new deals, Discover is offered at the same time as MasterCard and Visa, and at the same level, increasing Discover’s credibility, and most likely increasing the number of merchants who will add Discover to their list of accepted cards.
Saks Fifth Avenue to Offer World Elite MasterCard
Saks Fifth Avenue announced Thursday its plan to launch its frst co-branded credit card, the Saks Fifth Avenue World Elite MasterCard. Saks will be the first to offer this new type of MasterCard geared toward affluent customers. MasterCard launched the World Elite option, which targets those with annual household incomes greater than $250,000, simultaneously with the announcement of Saks as its first partner.
Customers who qualify for the new card will be automatically enrolled in the SaksFirst loyalty program, which normally requires a $1,000 spend, and will get up to 6% back on Saks Fifth Avenue purchases and 1% back on all other purchases. Points are converted automatically to Saks gift cards. In addition to these benefits, the World Elite MasterCard comes with various travel perks.
The Saks Fifth Avenue World Elite MasterCard will be issued by HSBC and will begin being issued on September 13.
Chase Mistakenly Sends Customer Information Out with the Trash
Chase announced today that tapes containing the personal information of 2.6 million current and former Circuit City credit card customers were mistakenly thrown out with the trash. Chase attempted to track the tapes and believes they were compacted and now reside in a landfill. Chase has been monitoring the affected accounts and hasn’t identified any misuse of personal information.
Free credit monitoring service is being offered to anyone whose Social Security number was on the tapes. Also, those affected are being encouraged to contact one of the three national credit bureaus to place a free 90-day fraud alert on their personal file and request a copy of their credit report.
Circuit City credit card customers were the only ones affected. Other Chase credit card customers do not need to do anything.
MasterCard to Cap Interchange Fees for Gas Stations, Publish Fee Schedule Online
In response to unhappy merchants who have both sued and lobbied Congress over fees they pay to credit card companies, MasterCard announced Wednesday it would begin publishing its interchange fee schedule on its Web site at mastercardmerchant.com. In addition, MasterCard announced a cap on interchange charges for fuel purchases that it said could reduce fees by up to 21% on some consumer gas purchases.
Interchange fees are charges that merchants pay to accept credit cards in their stores. The fees are paid to merchants’ banks and companies such as MasterCard and Visa. Each credit card transaction includes a charge to the merchant of anywhere from one to three percent plus a small flat fee.
Last month, merchant groups testified to the Senate Judiciary Committee that MasterCard and Visa were unfairly raising interchange fees, citing the fact that most merchants must accept credit cards to survive and thus must swallow whatever fees MasterCard and Visa mandate. MasterCard’s move may have been a preemptive strike to avoid having Congress stick its nose any further into the situation. Merchants also have filed lawsuits over the same issues, with several currently making their way through the court systems.
Credit Card Micropayments on the Rise, Especially Among the Young
Visa announced last week a 17% rise in card usage for purchases of under $25, and a Visa survey suggested those numbers would rise, especially among younger consumers. Visa reported that its volume on purchases less than $25 totaled $27.3 billion in the first six months of the year.
Visa’s new survey found that 55% of the 1000+ respondents use payments cards for small ticket items less than $25, with convenience and ease of use being their leading reasons for doing so. The survey suggests that an increasing number of these purchases are being made with debit cards versus credit cards. For consumers between the ages of 18 and 25, 44 percent of these purchases were made with debit cards, versus 33 percent of such purchases by shoppers over 45.
In addition, the survey found that 70 percent of consumers ages 18-25 are willing to use payment cards for purchases less than $2, compared to only 26 percent of consumers ages 45 and older.
Visa is aggressively pushing the use of credit and debit cards for small purchases. Key components of this strategy include waiving the signature requirement for transactions under $25 and cutting the credit and debit interchange rates that merchants pay for transactions of $15 or less.
Business Credit Card Users Get Two Chances at $50,000 from MasterCard
A new sweepstakes from MasterCard is giving small business owners the chance to win their ultimate need: money. Beginning today, and running through the end of October, every purchase made with a MasterCard business credit card or business debit card earns the cardholder an automatic entry into the sweepstakes that will end with two $50,000 winners. No other steps are necessary to be entered into the sweepstakes.
The sweepstakes is being held to call attention to the launch of MasterCard’s Zero Liability Protection, which completely removes any liability for business card holders in the event of an unauthorized use of their cards in a store, by telephone, or online.
Consumer Credit Card Rates See Small Decline; Business, Student Rates Up
For the first time in 2006, average credit card rates for consumers ticked down, according to the weekly IndexCreditCards.com Credit Card Monitor. On the other hand, students and small businesses fared worse.
The average credit card rate for non-reward consumer credit cards decreased to 14.14%, down just slightly from the previous 14.16%. For those with excellent credit, the average rate decreased to 11.23% from 11.25%.
Consumer reward credit cards also saw a slight decline, with the average APR (Annual Percentage Rate) declining to 15.62% from 15.66%. Those with excellent credit can find an average APR of 13.19% presently, down from 13.23%.
The news is not as good for students, though, as their rates continue to rise. Average student credit card rate: 16.52% (up from 16.46%).
After a period of very slight increases early in the year, business credit card rates continue to creep up, although they are still below consumer rates. The average non-reward business credit card rate increased to 12.15% from 12.11%, while the average rate for business credit cards with rewards increased to 14.11%, up from 14.05%.
Financial institutions represented in the survey include Advanta, American Express, Bank of America/MBNA, Capital One, Chase, Citi, Discover, MBNA, National City, Providian, Pulaski Bank, U.S. Bank, Wells Fargo and more.
Chase Buys Pier 1 Credit Card Business for $155 Million
Home furnishings chain Pier 1 Imports announced Wednesday the sale of its credit card business to Chase for $155 million. For its money Chase receives about one million active Pier 1 accounts with about $140 million in balances. The Pier 1 Preferred Card will continue to be offered to customers, and Pier 1 will receive additional ongoing payments based on credit card sales, new account generation and other credit-related activities.
According to the two companies, Chase will also provide help on customer marketing initiatives designed to increase Pier 1’s retail sales & profitability, although no details were provided on exactly how Chase might accomplish this.
The transaction has been approved by both companies and is expected to close in the fourth quarter of 2006.
Enlightenment Visa Offers Cardholders Health/Spirit Rewards
Yoga retreats, meditation benches and the chance to “sponsor the entire day’s nourishment for 100 Rishikumars” are not your typical credit card rewards, and the new Enlightenment Visa hopes that its unique offerings will make it stand out. Created by Conscious Enlightenment, a Los Angeles-based company that publishes Conscious Choice magazine and runs other health/mind/spirit businesses, the Enlightenment Visa offers a standard one point per dollar rewards program, but the rewards it offers are targeted to individuals that might be described by some as “New Age”.
PNC Bank Drops MBNA in Favor of Credit Card Alliance with US Bank
PNC Bank, which offers financial services in 8 eastern states and the District of Columbia, announced this week that it will begin issuing credit cards in association with US Bank starting September 1. PNC has been offering co-branded cards through MBNA since ending its credit card business in 1999. PNC’s arrangement with US Bank allows PNC to “own” the cardholders on its balance sheet, where its arrangement with MBNA had allowed MBNA to own the customers after paying PNC a finder’s fee of sorts. US Bank offers similar credit card processing arrangements to many local and regional banks, allowing them to offer credit cards as part of their financial services.
PNC will offer the Select Rewards Visa Platinum Card for consumers and the Platinum Business Rewards MasterCard to small businesses. The cards will offer zero percent interest rates on purchases and balance transfers (with no fee) for 12 months, and customers will also receive a $50 statement credit after their first purchases with the cards.
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