Ford to Offer Customers Free Bank Credit Cards

NEW YORK -- Ford Motor Co., already a major force in the credit card business, is planning to offer free MasterCard and Visa cards to consumers who have bought its automobiles in the past three years.

The card being introduced this week carries an introductory annual percentage rate of 15.9% and gives cardholders rebates on purchases. If it is well-received, Ford will make it widely available to the public, the automaker said Monday.

Ford will issue the card through a unit of its finance affiliate, Associates National Bank, Pleasanton, Calif. Associates already has more than three million bank cards outstanding, making it the nation's 11th-largest issuer.

First Since AT&T

Associates' newest offering is the first to sport the automaker's logo. The move makes Ford the latest nonbanking company to launch, or attempt to launch, a co-branded MasterCard or Visa card since American Telephone and Telegraph Co. introduced the Universal card last year.

The bank-owned card associations have since taken steps to limit further inroads by non-banking companies such as Sears, Roebuck & Co. and General Motors. But there is little they can do to stop Ford, which bought Associates in 1989.

Rules Have Been Tightened

Ford also has a presence in the credit card business through First Nationwide Bank, a California thrift purchased in the early 1980s.

Both MasterCard and Visa have tightened the rules governing affinity marketing programs following AT&T's success. Visa has taken a particularly harsh stance and recently extended a moratorium on new nonbank members through October.

"It sounds like a straightforward member program to me," a spokesman for San Mateo, Calif.-based Visa U.S.A. said Monday. "I don't think the moratorium applies because it is not retroactive."

Another automaker, Chrysler Corp., is laying the groundwork to offer private-label credit card services, issuing and processing cards for retail merchants. And General Motors Acceptance Corp., which now has a small affinity card program with Core-States Financial Corp., is widely expected to expand soon.

Approach Called Effective

"These kinds of programs make sense, especially for Ford, which already has Associates," said Donald Auriemma, a credit card consultant in Garden City, N.Y. "It's a brilliant way for Associates to market a card."

Sears also wants to get into the bank card business. Earlier this year, the Chicago-based retailer filed an antitrust suit against Visa, challenging an association bylaw that prohibits it from issuing Visa cards.

The Ford card is likely to be attractive to consumers. The introductory rate of 15.9% is lower than the industry average. In January, Ford will raise the rate to 19.8%.

But Ford is not planning on charging a fee for the card anytime soon, and it is likely to keep the rebate policy. Rebates of between 0.5% and 1.5%, depending on annual purchases, will go to cardholders in the form a check once a year. Sears has used a similar device to encourage usage of its Discover card.

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