KeyCorp has put a new wrinkle into credit card pricing, rewarding customers for paying down their loans faster.

With the card, called KeySmart, a cardholder can essentially choose an interest rate - 10.9%, 14.5%, or 16.9%. The greater the monthly installment payment, the lower the rate.

KeyCorp's KeyBank USA unit, which is introducing the MasterCard today after several months of testing, claims to be sending a more consumer-friendly message than other issuers that have been adding or raising fees. Most recently, the GE Rewards card attracted negative press when it posted a $25 annual fee for customers who do not revolve their balances.

"We think we will attract borrowers who will be better customers," said A. Jay Meyerson, chairman and chief executive of KeyBank USA and head of KeyCorp's national consumer finance businesses.

The card, which has a $20 annual fee, "competitively differentiates us and provides customers with a set of choices they haven't had before," Mr. Meyerson said at a media briefing last week in New York. The product aids in "the discipline and determination of customers not to be swimming in debt and risk having to declare bankruptcy to get out of it."

"We think this will generate good will and new-product sales," said Stephen A. Cone, executive vice president and chief marketing officer of Cleveland-based KeyCorp.

KeySmart is one of numerous innovations Mr. Cone and others have been orchestrating to burnish the $65 billion-asset banking company's image and establish "Key" as a national financial services brand.

Within the $13.7 billion consumer finance sector overseen by Mr. Meyerson, KeyCorp is trying to develop cross-selling relationships among its growing auto and recreational-vehicle financing, student lending, home equity, and credit card activities.

KeyCorp has not been a national credit card force, and doesn't intend to be, even with its unusual interest rate offer. The Nilson Report of Oxnard, Calif., said KeyCorp ranked 30th in bank cards with $1.7 billion of outstandings at midyear.

By limiting card marketing to customers of its 13-state banking network, KeyCorp "dodged the bullet" of credit-quality decline that has beset larger issuers, Mr. Meyerson said. "We're still not doing national plays," he added.

At the same time, with its ascent to the top five among auto lenders and an increasing emphasis on subprime borrowers, KeyCorp will be adding to its books hundreds of thousands of card prospects annually.

KeySmart's pricing is based on the percentage of an outstanding balance paid. On a $1,000 balance, a 5% repayment, or $50, sets a 10.9% rate on the remainder. A $30 payment, or 3%, gets 14.5%; a $20, or 2%, paydown, 16.9%.

KeyCorp said the potential interest savings can exceed the value of other cards' merchandise, airline mileage, auto-purchase, or cash rebates.

"Last year, creditors nationwide mailed out 2.6 billion card solicitations, with all sorts of rate and fee combinations," said Steve Hucal, senior vice president of KeyBank USA. "KeySmart is the only one that rewards customers for responsible debt management."

He noted that over the last five years, "personal incomes have risen 5% while consumer debt has risen 13%."

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