PNC Bank Corp. is following through on a promise it made earlier this year to expand its credit card portfolio rapidly.
On Monday the Pittsburgh-based issuer introduced a product called the Prime Value Card. A. William Schenck 3d, executive vice president of consumer banking, said it was PNC's first major credit card launch.
Despite the fanfare of a press conference held by nationwide conference call, Prime Value offers nothing more than competitive pricing.
It carries an interest rate set at 8.9% for six months and then rising to the prime rate plus 3.75%. There is a $18 annual fee for the regular card and a $28 fee for the gold version.
Over the next two years, Mr. Schenck said, Prime Value should double the bank's credit card portfolio, now $830 million in outstanding balances. The bank sees Prime Value as the key to beefing up its credit card business to a level that reflects its size and power.
PNC is ranked 12th among bank holding companies in terms of assets, but it is only the 42d-largest bank in terms of outstanding credit card receivables, according to The Nilson Report's yearend figures.
"PNC's credit card business needs to reflect the size of the bank," said Mr. Schenck.
He also said that PNC will look at cobranding opportunities, but that "most consumers are focused on the cost of their credit card."
PNC offers two cobranded cards nationally, with ServiceStar, a hardware chain, and Quaker State Corp. The latter product, introduced last September, offers coupons redeemable for free oil changes. PNC also offers a number of affinity cards, and it launched a Visa purchasing card last week.
"What is most interesting about this (product launch)," said industry consultant K. Shelly Porges, "is that they actually held a press conference announcing it, because it is not particularly unique for the market."
Ms. Porges also pointed out that using the word "prime" in naming a product appears to be a popular marketing strategy. Recently, Wachovia Bank and Star Bank introduced Prime for Life and Prime Value products, respectively, while NationsBank has been issuing a Prime Option card for nearly a year.
"Consumers generally believe that prime is about the lowest a bank can go, and that banks are offering their products at cost," said Ms. Porges. Currently, the prime rate is 9%.
Perhaps what distinguishes Prime Value is the fact that Robert B. McKinley, president of RAM Research Corp., a credit card tracking firm in Frederick, Md., was enlisted by the bank to provide his opinion of the product.
RAM Research publishes CardTrak, a monthly consumer newsletter that highlights some of the best credit card deals, as well as Bankcard Barometer, an industry newsletter that reports recent card trends and statistics.
Mr. McKinley said that he agreed to field questions from reporters about the card, not to endorse Prime Value but to provide a consumer perspective.
"There are not that many big banks offering low rates," he said.
About 90% of the low-rate issuers listed in RAM's CardTrak are small banks that are unable to make their product available to the masses.
"PNC is serious about offering millions of Prime Value cards, and I felt drawn to the product because it is not selling a gimmick. There is no game- playing," said Mr. McKinley.
Prime Value also reflects the marketing savvy of Jerry Craft's new company, Card Issuer Program Management Corp., of Atlanta. PNC is the start-up's first customer.
Mr. Craft is known primarily for his work at Wachovia Corp., where he built up the card business by undercutting the industry in pricing. He formed his own company several months ago after a brief stint heading up a card unit for First Data Corp.
Prime Value will be heavily promoted with television, radio, and print advertising in Pennsylvania, Delaware, Indiana, Kentucky, and Ohio, markets in which PNC does business.
By not charging a balance transfer fee and by keeping its interest rate low, PNC hopes to attract customers who don't pay their balances in full each month.
Cash advances are eligible for a six-month introductory rate of 10.9%, which then jumps to 14.75%.
In addition to Prime Value, PNC also introduced a no-fee credit card with an interest rate based on the prime rate plus 7.9%.
