Magazine article American Banker

Secured Cards Need Marketing Face-Lift, MasterCard Panel Says

Magazine article American Banker

Secured Cards Need Marketing Face-Lift, MasterCard Panel Says

Article excerpt

Members Split on What to Tell The Credit Reporting Agencies

Secured credit cards are creating a tricky situation for issuers.

As it becomes clear that consumer education is the key to restoring confidence in this product that had a shady past, issuers are hesitant to single out secured cards on credit reporting forms because they believe consumers will feel stigmatized.

Members of the MasterCard-sponsored Securd Card Advisory forum agreed last week that the industry needs to do a better job of marketing the cards. But the members remained divided about whether issuers should report secured card accounts as such to credit agencies.

MasterCard International Inc. has spearheaded the effort to educate consumers and issuers on the merits of secured cards, whose tarnished image issuers are trying to polish up.

"People still remember secured cards as the '900' number on television, and that is not the case anymore," said Ronald T. Urquhart, a forum member and the vice president of consumer credit for People's Bank of Bridgeport, Conn.

Seeking Consensus

The secured card advisory forum, which has met three times since its inception last year, is composed of 12 representatives of leading secured card issuers and officials of the New York MasterCard association.

The group decided to form a subcommittee to see if there is a consensus on reporting secured cards on the so-called "metro tape," a commonly used record of consumer credit information.

The decisions that come from the subcommittee could help establish industry standards.

The metro tape, which was revised in January, includes a new category to denote secured cards. Before the category was added, issuers could not report secured and unsecured credit cards differently.

Some industry types believe the secured card's appeal would be diminished if consumers knew their credit reports reflected that they own such a card. …

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