Most credit cards that pay rewards to consumers offer standard prize categories: cash-back rebates, discounts on hotel rooms, airline upgrades, and so forth.
BankAmerica Corp.'s new credit card pays a different sort of reward: By charging merchandise on the card, consumers can reduce the fees they pay on BankAmerica banking products and lower their credit card interest rates.
The new card is a reflection of the bank's explicit goal of enhancing customer relationships by linking credit cards to other bank products.
The concept is not new. Many banks give lower interest rates to customers who link credit cards to regular account packages, and some banks have created credit cards that enable consumers to earn mortgage interest reductions.
The AT&T Universal Rewards card, for example, offers reductions in interest rates, as well as free long-distance time.
Bill Anderson, director of marketing at BankAmerica's credit card subsidiary, Bank of America NA, said a bank card with self-referential rewards was better for business than another cobranding relationship.
"When you look at the evolution of cobranding, we've always looked outward for people motivated by brand, and we didn't take the time to recognize the power of our own brand," Mr. Anderson said.
Cobranded credit cards usually focus on promoting brands other than the bank's, he said. Bank of America felt the "benefit should be applied internally."
In the Bank of America program, cardholders earn a point for each $100 of purchases, plus one point for each month they carry a balance on a card. For instance, someone who earned 10 points could exchange them for a $10 discount on monthly checking fees; 50 reward points could translate into a $250 break on closing fees on a home loan.
The reward points do not expire, and they can be redeemed by calling a toll-free telephone number, according to the bank.
The new card is meant to recognize the 40th anniversary of the original BankAmericard, introduced in 1958 in Fresno, Calif. The card-which Bank of America refers to as "the forerunner of all bank credit cards"-was offered statewide the following year.
The new BankAmericard is being piloted in Fresno, Sacramento, and Stockton, Calif. Next year it will be offered in all the bank's markets.
The new BankAmericard carries no annual fee. The rate starts at a fixed 7.9% but jumps after six months to prime plus 8.49%, which would equal 16.99% today.
Given the nature of the product, those rates are not immutable. Cardholders can reduce their interest payments by making purchases and accumulating points. For instance, a consumers could cash in 350 points to receive a 3.5% reduction on their credit card interest rates.
Mr. Anderson said branch employees were excited about the new card, which they said could help them sell products. Bank of America is generating nearly one million new direct-deposit customers a year, he said, "and we're looking to offer as many of those people as possible a credit card relationship."
The new card is just the beginning of the hoopla. Bank of America is combing its archives to give BankAmericard a big 40th-birthday party.
"We're still looking at a variety of ways to leverage our historical credibility in the category, and some the fun ways to take a look at the nostalgic positioning of Bankamericard," Mr. Anderson said.
