Key Federal Savings Bank is once again tinkering with its secured card offer to attract more customers and visibility.
This time, the Havre de Grace Md.-based thrift is lowering the deposit amount that secures the line of credit. When customers send in their deposit check with their application, they can save $100 on the price of the deposit, and they receive a 25% increase on their credit line.
Key Federal normally requires $400 as a deposit, which earns a credit line of $500, or 125% of $400. "If we get a deposit with an application, then we know we have an account," said Robert M. Bouza, president of Key Federal's card operations.
Currently, 64% of Key Federal's new applications are not accompanied by a deposit. With this new enhancement, Mr. Bouza hopes to lower that number to 50%.
Key Federal is sweetening the offer with a Sony Walkman radio for $5.99. Also, people who request a Key Federal application package, regardless of whether it is submitted, receive a coupon for a $15 discount from Alamo Rent-a-Car.
Key Federal is one of the leading issuers of secured credit cards, with approximately 60,000 such accounts. In a drive to mainlain its competitive edge, the bank has stepped up its advertising and added a series of enhancements to the secured card product over the past two years.
Other programs include a prepaid telephone card; a one year contract with the Council of Better Business Bureaus, which stipulates that Key Federal participate in the council's alternative dispute resolution program; a lowered interest rate; and a number of educational tools designed to help consumers understand secured cards.
Key Federal's secured-card product carries a $35 annual fee and a 18.9% interest rate, and offers a deposit savings rate of 4%.