Magazine article American Banker

Citibank's 'Driver's Edge' Seen as Costly Successor to Cobranded Ford Card

Magazine article American Banker

Citibank's 'Driver's Edge' Seen as Costly Successor to Cobranded Ford Card

Article excerpt

When Citibank unveiled the replacement program for its defunct Ford Motor Co. cobranded card this week, industry experts expressed surprise at the tactics the bank chose.

Citibank said that only former Ford card holders are eligible for the new program, Driver's Edge, which offers them a less generous rebate than the Ford card, but allows them to select a vehicle from any manufacturer.

The other difference between the two programs is less obvious to consumers: Citibank is absorbing the entire cost of the Driver's Edge rebate and will pay for automobiles that will be raffled off once a month until August.

"I'm confused by the profitability of this product," said credit card consultant Michael Auriemma, president of his own Westbury, N.Y. firm.

Driver's Edge gives cardholders a 2% rebate on card purchases, up to $500 a year. Rebates will take the form of a check made out to the cardholder, and are capped at $1,500 for each vehicle purchased. There is no annual fee.

The Ford program, also a no-fee product, allowed cardholders to earn a 5% rebate on their purchases, up to $700 a year with a maximum of $3,500. But the car manufacturer chipped in to underwrite the cost of the rebate, which eventually proved to be too costly for Ford.

In July, Citibank announced that Ford was ending the program on Dec. 31. On Jan. 1, all Ford card holders were automatically converted to the Driver's Edge program, which will not be offered to new customers.

Maria Mendler, a Citibank spokeswoman, said the bank may allow some of its other customers who request the Driver's Edge card to switch. …

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