To boost its eight-year-old Mileage Plus First Card, First Chicago Corp. has introduced a prepaid phone card that lets cardholders earn miles by making long-distance phone calls.
The Chicago-based bank said it is the first to unite a cobranded airline card with a prepaid phone card.
The Minutes and Miles Phonecard is being sent to holders of Mileage Plus First Card, which is issued through FCC National Bank, First Chicago's credit card subsidiary.
About 25% of a planned one million phone cards have been sent, with the remainder to be issued this month, according to First Chicago.
Consumers can use the new card by dialing a toll-free number printed on its back and entering a personal identification number, followed by the number they wish to call. The phone system tracks the prepaid minutes and informs the cardholder how many long-distance minutes remain, First Chicago said.
Mileage Plus MasterCard and Visa cardholders will earn one mile for every dollar's purchase put on the new card, which then goes toward tickets on United Airlines, First Chicago's partner.
"Prepaid phone cards are easy to use and have proven to be an economical way to stay in touch while traveling, for kids away at school, and for international calling," said Scott P. Marks, chairman of FCC National Bank, in a release.
The card comes in five randomly assigned designs that feature United aircraft.
"There's a lot of collectibility in these cards," said Stephen Arnold, vice president and product manager for cobranded cards at First Card. The different designs could conceivably entice consumers to buy all five, he said.
Minutes and Miles comes with 10 free minutes of long-distance calling time that can be used anywhere in the continental United States through Aug. 31. Card members will be able to buy additional phone time at the rate of 25 cents a minute, although they are not obliged to buy more time.
Cardholders using a Mileage Plus First Card to buy additional minutes will earn double miles for each dollar of telephone calls on Minutes and Miles, First Chicago said.
Industry observers indicated that the First Chicago card was likely to do reasonably well. "I think it's pretty good," said Tammi Scheetz, research director for Inside Flyer, a Colorado Springs-based magazine.
She saw as a key benefit that "you don't have to switch your long- distance carrier" to use the new card.
Credit cards with frequent-flier tie-ins are a hot commodity within the industry. In January, Old Kent Financial Corp. launched a program in which cardholders could earn $100 toward any U.S. airfare for every $5,000 spent. This followed First of America Bank Corp.'s introduction of FirstAir Visa, which, like the Old Kent program, gave cardholders a choice of domestic airline.
Linking phone usage and travel miles, though, is a fairly new idea, and industry followers will be watching closely to see what happens. First Chicago predicted that $1 billion worth of prepaid phone cards - a product largely unknown just a few years ago - would be bought in the United States this year.
"There is a lot of mixed reaction" to phone cards, said Robert McKinley, president of RAM Research Corp., Frederick, Md. "There are those that love them and those that can't stand them."
Allowing that they are "convenient in that they're paid ahead of time," Mr. McKinley speculated that cards such as First Chicago's might find a niche among business travelers who must pay for their personal calls or do not want others to know where they're calling.
First Card's Mr. Arnold predicted that the phone card market would continue to come on strong. "It offers security," he said, "plus, people often don't have a lot of change in their pockets to make calls."