Discover Financial Services hopes a new custom credit card creator will help it attract more customers.
The tool, announced last week, lets people choose the terms for their accounts and a rewards program, and analysts said it is part of growing movement to give consumers exactly what they want.
"We're always trying to find new ways of attracting and acquiring new customers, and I think offering CardBuilder is thematic with what consumers want right now, that they can personalize their product and they have a product that works for them," said Anas Osman, Discover's vice president of acquisition. "Rather than continue to predict what consumers want, we thought it would be a good idea to have consumers tell us what they want."
Consumers can apply for a customized card at Discover's CardBuilder.com Web site.
To start the process, they first describe their credit standing and choose how they plan to manage their balances; the Riverwoods, Ill., company uses this information to identify the best offers that might be available for each person.
Applicants then customize their card in three areas: interest rates and other payment terms, rewards program and card image.
To select the terms of the card product, applicants can specify which features are most important to them, such as a low introductory rate, a longer introductory rate, low interest on purchases, low rates on balance transfers or a longer term for balance transfer rates. An interactive chart then displays the various offers based on those choices.
The tool has slide bars that let applicants tweak each term and see how their choice in one area affects other terms.
For example, if they increase the purchase interest rate, other rates may drop to reflect the trade-off, Osman said.
Applicants can also choose from among several rewards program that are available for their cards. The options include a 5% cash-back offer, airline miles or a Pay-On-Time Bonus — an interest credit for paying on time.
Adil Moussa, an analyst at the Boston research company Aite Group, said letting people choose their own rewards programs would likely be appealing to consumers.
"Rewards have always been a big deal in card issuing, and it is what really attracts cardholders initially," he said. "Giving consumers a choice of rewards is definitely going to play a factor in the adoption of the Discover product."
Applicants also can choose from 28 designs for their cards.
Osman said Discover is not using national advertising to market CardBuilder but will promote the tool online and in direct mail.
Letting people select their own terms could also help Discover comply with more stringent regulations that are taking effect this year.
Megan Bramlette, a managing associate at Auriemma Consulting Group, said CardBuilder could satisfy some requirements of the Credit Card Accountability, Responsibility and Disclosure Act, which requires issuers to be more transparent about the terms of their credit card agreements.
"It's more the spirit of the act, to provide clear descriptions of what the issuer obligations are in terms of rates and fees," Bramlette said.
"The tool gives customers ample opportunity to understand what they are getting into when signing a card agreement."
Osman said Discover did not specifically design the CardBuilder feature to help the company comply with the CARD Act.
"The CARD Act has been on our minds and everyone is thinking through how to react to it, but [developing the customization tool] was a separate platform and coincidental, and it happens to work to Discover's benefit," Osman said.
Discover is not the first issuer to offer flexible terms. For several years Capital One Financial Corp. has offered a product called CardLab that enables people to select their terms and submit photos to appear on their cards.