NOVEMBER 2004

Co-Branding of Card Products

The forging of new co-branded credit card relationships continues on. Two new co-branded products were rolled out in recent months. JP Morgan Chase is offering a new cobranded card to the customers of Circuit City Stores, the large electronics retailer based in Richmond, Virginia. Circuit City has 618 retail stores nationwide. It had operated its own proprietary card program since the early 1990s, and a cobranded Visa card beginning in 2002, but sold both portfolios over the last two years. Bank One purchased the $1.8 billion private label portfolio and subsequently merged with JP Morgan Chase. Now, the bank is rolling out a redesigned Circuit City rewards card to current holders of the proprietary card and to other Circuit City customers. The card will offer 5% cash back in the form of a Circuit City gift certificate on in-store purchases. Outside purchases on the card will net 1% cash back to cardholders.

In another new cobranding relationship, the bank subsidiary of Charles Schwab & Co. will partner with MBNA to offer a credit card to the brokerage firm's 7.5 million brokerage and banking customers. The Schwab Bank Visa card will carry no annual fee, a variable interest rate of prime plus 1.7%, and a choice of cash or travel rewards. Purchases made at the Schwab brokerage on the Schwab Visa card earn two points per dollar spent, while other purchases earn one point per dollar. Thomas Knobloch, vice president at Schwab Bank, told the American Banker that the company expects people to use the card in-house to pay for brokerage fees and financial consultations. Points can be redeemed for cash rebates, airline tickets, or free brokerage trades.