Magazine article American Banker

Chase Offers Lower-Rate Cards to Compete with Other Issuers

Magazine article American Banker

Chase Offers Lower-Rate Cards to Compete with Other Issuers

Article excerpt

Chase Manhattan Corp. has joined the growing ranks of credit card issuers that are dangling an introductory rate to attract new customers and a tiered pricing structure to retain profitable customers.

Chase this week announced that new customers will qualify for a no-annual-fee card with a variable 9.4% rate for purchases and balances transferred from other cards. Some of Chase's best existing customers will also qualify for the promotional rate, which is good until Jan. 1, 1995.

After that, a rate of prime plus 10.4 points for classic cards and prime plus 9.4 for gold cards will apply. At today's prime, the rates would be 16.4% and 15.4%, respectively. But under the tiered pricing schedule, many customers may qualify for better rates.

The rate schedule gives preferred rates to customers who maintain a Better Banking account at Chase and those who carry a high balance. The reward to customers who use the other Chase banking services reflects a trend in the industry to position the credit card as an integral part of a broad program of retail banking services.

Analysts said Chase's pricing moves were designed to solidify the bank's card base in a highly competitive environment.

"If you look at the numbers, Chase hasn't gained the same receivables growth as others in the business in the past year," said Diane Glossman, a bank analyst for Salomon Brothers Inc. "I would look at this as one in a series of steps to bolster the business."

Robert McKinley, president of RAM Research Corp. of Frederick, Md., pointed out that eight of the top 10 bank issuers, including Chase, face the loss of accounts to card marketing specialists and that single-digit introductory rates and tiered pricing have been in vogue for some time. …

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