Fleet Financial Group has joined the legions of banks now issuing cobranded credit cards in a deal with the discount department store, Caldor Corp.

Suggesting that cobranded products will play a significant role in growing the Providence, R.I., bank's credit card portfolio, Elaine Weeks, vice president of Fleet's credit cards, said Fleet is currently developing a number of other cobranded products.

"We believe that cobranding has to be an important part of our marketing strategy," said Ms. Weeks.

The new Caldor Visa card gives customers a 1% rebate on all purchases, redeemable for Caldor merchandise. When the card is used at the department store, the rebate increases to 2% for goods under $1,000 and 3% for items costing more than $1,000.

Each October, cardholders will be sent a Caldor gift certificate in the amount of their accumulated rebates. Ms. Weeks said there have been discussions to distribute the rebate more frequently, but currently the partners' strategy is to encourage people to shop at Caldor during the holiday season.

Other benefits of the program include no annual fee and an introductory interest rate of 9.9% for people who transfer balances to Fleet. The low rate is good until the original balance is paid off, though after 90 days customers pay 16.25% for new purchases.

The 9.9% rate also applies for cash advances during the introductory period.

Additionally, cardholders earn a 10% discount coupon when they first use their Caldor cards at the store.

Caldor, the fourth largest discount department store chain with sales of $2.6 billion, is distributing applications for the credit card in its 158 stores in the Mid-Atlantic and Northeast.

Caldor competes with such companies as Wal-Mart Stores Inc. and Kmart Corp., and appears to be the only discount department store to offer a cobranded credit card, said Ms. Weeks.

For its part, Fleet is preparing a direct mail drop, most likely to Caldor's customers who already own the company's private-label card.

Fleet, which has been growing rapidly since 1991, said it expects to exceed $1.5 billion in outstanding credit card receivables and one million accounts this year. Currently, balances total $1.3 billion.

Credit card consultant Michael Auriemma, president of Auriemma Consulting Group, said discount stores are becoming more popular as cobranding partners.

"Caldor has a loyal following of consumers," Mr. Auriemma said. "People who don't spend that much and who wouldn't necessarily be attracted to a General Motors credit card."

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