PNC Hopes Cut-Rate Card Will Lure Healthy Portion of Nutrition Centers'

PNC Bank Corp. has introduced a cobranded card with a low rate and a rebate designed to attract the three million members of General Nutrition Centers' discount cardprogram.

The cobranded MasterCard offers a 1% rebate on general purchases, to be redeemed at 2,200 General Nutrition Centers stores nationwide.

The card carries an $18 annual fee and a rate of 8.5% that jumps to prime plus 4.9% after six months. Consumers can opt for a no-fee card with a rate of prime plus 8.9% after the teaser rate expires.

"We're extending pricing competition into the cobranding arena," said Keith D. Coughey, group vice president, PNC credit cards.

Recently the bank launched the Prime Value card, which has a rate of prime plus 3.9%. The card was developed by PNC and Card Issuer Program Management, the marketing and administrative outsourcing company headed by Jerry Craft. PNC is the Atlanta-based company's first customer.

PNC had $880 million in outstandings and 995,000 accounts as of July, ranking near the bottom of the top 50 card issuers. The bank is partnering with Mr. Craft's company and First Data Corp. to try to bring its portfolio into line with its status as the 13th-largest bank in the nation.

The GNC/PNC Bank Card will be marketed to members of the General Nutrition Centers gold card program, which offers 20% discounts on purchases made on the first Tuesday of each month, as well as discounts on travel, movies, and other goods and services. Memberships cost $15 per year.

Mr. Coughey hopes to nab at least 5% of Gold Card members, or 150,000 cardholders. The bank will attempt lure other health-conscious customers with take-one displays in stores and PNC branches.

Robert B. McKinley, president of RAM Research, a Frederick Md.-based card tracking firm, said that even though the card carries an annual fee while most cobranded cards are free, it might attract consumers with the low rate. "If you could sell the value, people will pay for it."

He said the card would appeal to "those customers drawn to rebate offers, as well as those sensitive to price."

Even so, Michael Auriemma, president of the Auriemma Consulting Group of Westbury, N.Y., said, "There is no way to market that card with a fee in 1995."

He said the no-fee card with a higher interest rate could be a better deal, but "to give consumers a choice is not a good idea. The more choice, the further the response rate will be depressed."

Research indicates that customers tend not to return solicitations that offer choices, even between Visa and MasterCard, he said. "The consumer has no idea which product is better. Give them a price and stick to it."

Mr. Auriemma also said the rebate, at 1%, is "on the bottom of the spectrum of rebates, with the GM card at 5% back, and oil companies at 2% or 3%."

Industry experts said it takes heavy targeting to find consumers willing to pay a fee for a low rate card, such as Wachovia Corp.'s customers. Rebate cards tend to attract transactors who don't revolve balances and are therefore less interested in rate and more concerned with the benefits of the card.

"If you're going after people who want a rebate," Mr. Auriemma said, "don't try to find people willing to pay a fee for low rate."

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