First USA Inc. continues to build on the dreams of home buyers.
The Dallas-based credit card specialist said on Thursday it will market a no-fee card to customers of Countrywide Home Loans Inc. First USA, the nation's fourth-largest issuer, has been marketing cards to customers of Knutson Mortgage Corp., Minneapolis, and Capstead Mortgage, Dallas.
The Countrywide Visa card will be made available to new customers of the Pasadena, Calif.-based mortgage company - the nation's second-largest originator and servicer of home loans.
Targeting recent movers is a regular strategy that most large issuers use in an increasingly competitive credit card market.
"New movers have a credit need and the response rate to those mailings is usually double that of other mailings," said Michele Turkel, president of Spectrum International Consulting Corp. in Scarsdale, N.Y.
Countrywide Home Loans president Stan Kurland said the card will offer homeowners "additional spending power and significant money-saving potential."
First USA chose Countrywide because "they have tremendous customer focus, and a card with a low interest rate and a balance transfer option is critically important for mortgage holders," said Tom Nowlin, senior vice president, partnership marketing for financial institutions.
The card comes with a rate of 5.9% for six months and a balance transfer option. It jumps to a fixed rate 15.99%.
Although cardholders will also be eligible to enroll in First USA's Value Miles frequent-flier program, with the $29 annual fee for that program waived for the first year, no rebate structure is included.
Credit card partnerships that limit customer benefits are not out of the ordinary, said industry observers. Wal-Mart and Chase Manhattan Corp. introduced a cobranded card last fall that offered a low interest rate but no rebates.
"History shows that when there is a trend to high delinquencies and bankruptcies, issuers are resistant to offer a great deal of incentives and benefits," Stanley Anderson, president of Anderson and Associates in Arvada, Colo.
Ms. Turkel said that First USA and Countrywide expect the images and brands of both companies to attract cardholders.
Applications will be mailed to over a million Countrywide customers. New consumers will being targeted when they apply for a home loan.
But without the lure of significant benefits, attracting existing mortgage holders will be a harder sell, said Steven J. Smith, president of S.J. Smith & Associates in Scarsdale, N.Y.
"Homeowners buy a new home on average every seven to 12 years," Mr. Smith said, "so maybe this is a way for Countrywide to keep those relationships."
