AT&T; Ups Ante in Credit Card Game
AT&T; will announce today an aggressive program to lure new customers to its Universal credit card by waiving forever its $20 annual service fee for consumers transferring $1,000 or more in debts from a bank-issued charge card to the Universal Card, company officials said Sunday.
And, in a bid to cash in on consumer anger over high credit card interest rates in an environment of relatively cheap credit, AT&T; said it is lowering its interest rate for new card holders to 16.4% as of April 1, a full 1% below its current rate, and as much as 2% to 3% below rates charged by bank card issuers.
AT&T; is promoting its transfer program as a “credit card refinancing” plan, similar to the home mortgage refinancings that became popular with the steep decline in interest rates over the last six months. “Why not bring your credit card debts over to a card that will charge you a lower rate?” asked Bruce Reid, an AT&T; spokesman.
The new program is AT&T;’s latest ploy to steal credit card market share from banks, which have typically been the primary issuers and beneficiaries of Americans’ love affair with the cards.
The program should be especially attractive to consumers with high credit card balances who typically repay only a small portion of their outstanding bill each month and are charged interest on the remainder. For these consumers, the 18% to 20%--or more--interest rates that bank card issuers charge have become onerous.
“We want consumers who are tired of paying high interest rates,” Reid said. “That’s who we’re aiming at.”
But the AT&T; offer is not geared to just anyone with an over-extended credit line.
Consumers wanting to take advantage of the new debt transfer program, which expires June 15, must first apply and qualify for an AT&T; credit card. Upon acceptance, AT&T; issues the consumer a set of Universal Card checks which the consumer can use to pay off a minimum of $1,000 in debts on existing bank credit cards.
When the checks clear AT&T;’s bank, the debts are transferred to the consumer’s Universal Card and the customer is eligible for the no-annual-fee feature of the card.
Unveiled just two years ago, the Universal Card has grown rapidly to become the third most popularly held card in the nation, behind only those issued by CitiBank and Chase Manhattan Bank. AT&T; gave its card a huge boost in popularity by offering to waive its $20 annual fee to customers who subscribed to it in its first year on the market.
About 8.5 million Americans responded, half the company’s current 13 million card holders.
