Newspaper article St Louis Post-Dispatch (MO)

A Maze of Plastic Consumers Try to Make Their Way through the Confusing State of Credit Cards

Newspaper article St Louis Post-Dispatch (MO)

A Maze of Plastic Consumers Try to Make Their Way through the Confusing State of Credit Cards

Article excerpt

AFTER a two-year price war that helped nudge credit-card rates to a record low, issuers are increasingly shifting the battle over your wallet to a new front, creating more consumer choice - and confusion - than ever before.

These days your mailbox is likely to bulge with offers from some sources that would have been unthinkable even five years ago, each tempting you to pass up lower interest rates by dangling a "reward" of something they make or sell.

"No industry is off limits," proclaimed Brad Hennig, spokesman for Visa in Foster City, Calif.

Indeed, General Motors will kick back thousands on a new car, while Nordstrom, Sharper Image and Apple Computer will give you a break on leather shoes, vibrating chairs and personal computers. Shell Oil will give you free gas, and virtually every airline will give you a free ride. Charles Schwab will give you discounts on financial publications to help you invest, while Fidelity will tuck away money directly into its mutual funds.

Such offers have proved so popular, in fact, that even banks that issue cards are getting in on the act. Wells Fargo Bank will discount a mortgage, while Nationsbank will deposit cash in an annuity for your retirement. And if you're willing to make a commitment that lasts longer than many marriages, Mellon Bank will refund all the interest you pay over the next 20 years, providing you're willing to wait until 2014 to get it.

"Applying for a credit card might be like making a hoagie," said Robert B. McKinley, president of RAM Research Corp., which tracks the credit-card industry. "Do you want air miles? Do you want a rebate? Do you want a low interest rate? You can design it yourself."

The problem is: How do you pick the card that's best for you?

For most consumers, the answer still focuses primarily on interest rates and annual fees. But today's offers are forcing consumers to compare the value of one product against another, making the credit-card decision as difficult as choosing between the cash in Monty Hall's fist and the curtain on "Let's Make a Deal."

"That's what makes this country great," said Stephen Bartell, vice president for Mastercard International, which has been the leader in developing the field of "co-branded and affinity" cards and has signed up nearly 160 partners in the last four years.

"It's the consumers' responsibility to check out these things as far and wide and deep as they can, but all this information is available. They can put things side by side and determine what they want their wallet to look like."

If Bartell sounds excited about co-branded cards, it's because he is. He remembers the 1970s when credit cards were a one-size-fits-all, mass-market product. Credit cards began to evolve in the free-spending 1980s with the introduction of specialty products such as the first gold cards and affinity cards. …

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