Ameritech to announce launching of MasterCard.

Ameritech, the Chicago-based telecommunications company, today will unveil plans to offer a credit card.

The product, sources say, will be available next Tuesday and will be similar to the AT&T Universal card. The card will have the features of both a telephone calling card and a bank credit card, and will not carry an annual fee.

Ameritech's card will be a MasterCard. Users will get a 10% rebate on telephone calls charged to the card. A check representing the telephone savings will be mailed to cardholders at the end of each year.

Vast Customer Base

Ameritech - whose telephone subsidiaries serve some 12 million consumers in five midwestern

Nonbank Card Issuers

Are a Big Market Force

Share of market for card

receivables at yearend 1990Sears, Roebuck 6.76%American Express 3.53Ford 1.47Household 1.47First USA (*) 1.03Capital Holding 0.94General Electric 0.88Advanta 0.74All nonbanks 18.44%

(*) Owned by a management group financed by Merrill Lynch

Source: Credit Card News

states - said in May that it was working with a unit of Household International to develop a credit card. But neither company provided any details of their plan.

Sources close to the companies said Wednesday that Ameritech will participate through Household Bank in MasterCard International's co-branding program. That initiative allows MasterCard's member banks to issue cards in conjunction with a merchant or other service provider.

Co-branded cards typically bear the logo of the issuing bank as well as its merchant partner, with the "co-brander" providing special features to the card.

The AT&T Universal card, issued by a subsidiary of Synovus Financial Corp. of Columbus, Ga., is available in both MasterCard and Visa versions.

Spokesman at New York-based MasterCard and at Household would not comment on the Ameritech card. A spokesman for Ameritech could not be reached for comment.

In AT&T's Footsteps

Ameritech's card will make the company the first of the former AT&T subsidiaries known as Baby bells to enter the bank card business. AT&T launched its program in March 1990 and by the end of the year, boasted the country's fifth-largest bank card portfolio in terms of accounts. It currently has $3 billion in card loans outstanding.

AT&T success sparked an uproar among banks, which claimed that the card's calling feature was a perk they could not match. MasterCard and Visa soon moved to change the rules under which banks can issue co-branded and affinity cards.

Visa U.S.A. took the harder line and now forbids access through its accounts to others, such as telephone accounts, that a bank does not control. MasterCard allows such access, making programs like Ameritech's possible.

Limited Range?

It is not clear whether the new Ameritech card will be good for calls outside its midwestern service region. AT&T's card can be used for long-distance calls throughout the U.S. and in some other countries.

The telephone business represents a tremendous opportunity for banks interested in co-branding, according to MasterCard. More than 100 million consumers carry calling cards.

Growth at Household Credit

The Ameritech program is likely to be a boon for Household International, the Chicago-based finance company. Its card unit, Household Credit Services, Salinas, Calif., is already the country's 10th-largest bank-card company, with some three million Visa and MasterCard accounts and $2.9 billion in card loans outstanding as of July 1991.

The company's card receivables will soon total $3.59 billion, following the acquisition of part of CoreStates financial Corp.'s card portfolio.

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