Magazine article American Banker

Household Issues Card for Microsoft

Magazine article American Banker

Household Issues Card for Microsoft

Article excerpt

Microsoft Corp. has dipped another toe -- a little one -- into the financial services swimming pool, striking an agreement with Household International to issue a private-label credit card for the software company's business customers.

The initiative, Microsoft's first venture into the world of plastic, was revealed Monday in an announcement by Household. But the arrangement has been operational for the past two months, according to Dick Klesse, national director of Household's retail services.

Household is the second-largest issuer of private-label credit cards in the United States, and is active in other forms of sales financing as well.

The purpose of the Microsoft card is to enable developers of Microsoft-based business computer systems to purchase on credit Microsoft's software and hardware, as well as "other related non-Microsoft products" -- products that the developers would then resell to their own customers on a value-added basis.

Household said the current program extends a $25,000 revolving credit line at a 9.5% annual percentage rate to participants in its Microsoft System Builder Program.

According to Mr. Klesse, Household has similar private-label contracts with retailers such as Comp USA. Under the Microsoft deal, Household receives any interest accrued on the account. But Mr. Klesse said there is a financial arrangement with Microsoft involving finance charges, though he would not give details.

Mr. Klesse downplayed Microsoft's financial incentive in the program. "What it looks like is that they want to sell more software and hardware," he said.

News of the private-label card deal comes as Microsoft has reignited the vigilance of some players in the financial services industry after a period of relative placidity. …

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