its credit card unit is still cooking up holiday specials. Last week, Chase introduced the Retail Rewards program, which is timed to take advantage of the holiday shopping season. Customers get a 5% discount at selected merchants for a one-time $25 fee. A direct mail blitz will provide the six million Chase classic and gold cardholders with a list of more than 100 participating national retailers, from Ace Hardware to Nobody Beats the Wiz. But they can chose only one for the reward. CompUSA, the Gap, Ikea, and Kmart are among the record and book stores, drug stores, clothing shops, department stores, sporting goods stores, and office supply shops on the list. Consumers are allowed to select a new merchant every six months. The program has a $250 cap on rewards per year, but to earn that much, the consumer would have to spend $5,000 at one or two locations. Once the consumer selects a merchant, the rest is automatic. The saving shows up on the monthly statement. The retail program follows Chase's Flight Rewards, launched in September, which converts dollars into points toward free airline tickets. For a $25 fee, consumers can earn a free ticket worth up to $500 after racking up 25,000 points. The program mirrors those at Bank One, First of America, and Star Bank. "We're on a quest to develop programs to satisfy the needs of all cardmembers," said Sandra Jetton, a Chase vice president and director of customer marketing. Though Chase will pay for the rewards, Ms. Jetton said building loyalty is more important than the cost of funding the program. But Donald Auriemma, a Westbury, N.Y.-based consultant, said, "There is a universal desire to add fee income to bank card accounts." "We're trying to impress upon our cardmembers that this is not an annual fee," said Ms. Jetton. But she added, "You will probably be seeing more fee enhancements as cardmembers tell issuers they want more value. The only way to deliver something meaningful is to put some sort of program fee against what you're developing," Mr. Auriemma called Retail Rewards "an interesting product," but said, "the rub here is, I have to select a retailer." He pointed out that for someone who is planning to purchase a computer at CompUSA or a color television at the Wiz, "this becomes attractive." He said the general public would find "some perceived value, but, I'm not sure about the complexity of having to select the retailer of choice for that six-month period." Ms. Jetton said Chase monitored its card base's purchasing habits for several months and selected the most popular locations for its program. "While we know this won't work for every cardmember," said Ms. Jetton, "a lot of our cardholders spend large amounts at particular retailers - enough that it would be of value to them to have this program." Ms. Jetton said she suspects Retail Rewards will be more popular than Flight Rewards, because a greater portion of the card base would see value in it.

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