In a crowded market, issuers seek niche.

Niche markets are the new horizon for credit cards, as bankers bend over backward to attract everyone from gays and lesbians to divorced and widowed women.

As the general public gets bombarded with special offers, some bankers are seeking out segments of the population that have been overlooked in the past.

"I think the credit card market has been tapped out," said Jill Brader, vice president of marketing for Key Federal Savings Bank.

Although the market is nearly brimming, secured cards are becoming a popular alternative for issuers who want to expand their portfolios without exposing the bank to credit risks.

Secured cards require a deposit in exchange for credit, and therefore reach people that never had or can't get credit, such as students, immigrants, and consumers with poor credit ratings.

High School Students Targeted

Ms. Brader, who heads up the secured card division at the Havre de Grace, Md., thrift, said she tries to attract divorcees or widows -- who may have difficulty getting a card because they have no credit history. She also targets high school students, a group that most financial institutions overlook as they concentrate on college students.

Affinity groups are another avenue. While many banks have implemented credit card programs with minority organizations, People's Bank of Bridgeport, Conn., launched a unique program in late June.

"We established partnerships with two gay and lesbian organizations to offer a credit card to those populations," said Jack Curry, vice president of credit card marketing.

People's reaches the Latino population through a partnership with Telemundo, the Spanish-language television network. Written and oral customer communications are in Spanish and English.

Cobranded cards, low interest rates, rebates, value-added incentives, and balance transfers can lure cardholders from one bank to another as mainstream consumers demand more for their money.

'A Classic Price War'

"What you're seeing on the issuing side of the business is a classic price war," said Brian J. O'Hare, president of Norwest Card Services.

And the war has lasted more than a decade. During the past 10 years, financial institutions have been identifying and putting credit cards in the hands of people who didn't have them. In the early 1980s, 30% to 35% of the adult population had cards. By 1990, 70% carried plastic.

"Essentially, it's a saturated market, a zero-sum game," said Mr. O'Hare.

Even so, profits are up. According to a study by Synergistics Research Corp., Atlanta, card profits last year escalated 29% over 1992, reaching their highest level since 1990.

While credit cards accounted for only 5% of the banking industry's $3.7 trillion in assets, they provided 10% of the industry's record $43.4 billion in profits, Synergistics concluded.

Anne Moore, president of Synergistics, said credit card profits might decline as interestrate hikes make the cost of funds higher and squeeze margins.

She also said that marketing expenses have increased for banks because of the value-added programs, in which the rewards offered to cardholders -- frequent flyer miles, discounts, and rebates -- have to be paid for.

"Banks have to be very savvy to get customers away from other financial institutions and keep them," said Ms. Brader. "Everybody's trying to get more for their dollar these days." Q: In a highly competitive arena, what's your strategy for credit card marketing?

We've been very heavy into direct mail with an offer targeted to the revolving customer. That will continue to be our marketing thrust through the remainder of the year.

Our target group is people who carry a revolving balance.

In most cases they have a card. We price our offer to be more attractive than the card they already have.

We have an annual fee associated with the card that allows us to improve the stated APR.

We've also got a balance transfer offer with an introductory interest rate.

Since we started in the business nine years ago, we've focused on niche marketing.

We just launched programs for the gay and lesbian market at the Gay Games and Stonewall 25 in late June in New York. We established partnerships with two gay and lesbian organizations, to offer a credit card to those populations. Based on purchase activity, contributions are made to charities of the cardholders choice. The demographics on this segment of the population is better than average.

It's a good opportunity for the bank and it benefits the community.

I think you'll see a lot more of the reward marketing -- the plastic perks.

Banks are going to try to keep their loyal customers by giving them special rewards for the increased use of their credit card and consolidating their usage on that one card.

The secured credit card would be marketed to people who have not established credit or had problems.

Banks have obviously gone after college students because of the saturation in the credit card market. Catch them while they're young -- but they have to offer a good deal to keep them.

I'm in charge of secured card marketing. I try to attract individuals that don't have credit and can't get it -- recently divorced or widowed women who can't get credit in their name, because they have no credit history, or someone coming out of high school. The larger credit banks have been flooding the college market for a long time, but students who don't go on to college have a hard time getting credit. I go after individuals who had credit and lost it through no fault of their own. After 24 months of timely payments and no additional credit problems they get an unsecured card offer.

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