In an industry always on the lookout for the next big deal, the November 1993 announcement of a cobranded Dean Witter-NationsBank credit card gave many observers reason to pause.

The Prime Option MasterCard product "certainly got a lot of press when it was introduced," said Eileen M. Friars, president of NationsBank's card services unit. "I think, perhaps, a part of it was the nature of the partners involved."

The public attention seems to have subsided, but the industry stir continues.

Dean Witter, Discover and Co., the New York-based financial service provider formerly owned by Sears, Roebuck and Co., had been trying to break into the MasterCard and Visa associations, only to be refused entry.

Ultimately, Dean Witter sought a legal remedy, and its antitrust case against Visa is still pending. In the meantime, it is becoming a cobranded partner with MasterCard, the result of MasterCard's deciding to settle the similar lawsuit against it.

Not only did the venture with NationsBank and MasterCard give Dean Witter a foot in the door of the bank card industry, it eased tensions with the MasterCard side of the bank card industry.

Ironically, the cobranded NationsBank card carries the Prime Option name -- the one Dean Witter wanted to use if its subsidiaries, MountainWest Financial in Utah and Hurley State Bank in South Dakota, were allowed to become bank card association members.

In theory, the Prime Option MasterCard competes with Dean Witter's own Discover brand, although company officials don't see it that way.

Instead, they said, the Prime Option MasterCard, pegged to the prime interest rate, is aimed at people who revolve their balances and look for a low-priced card.

The card was priced initially at 9.9%, but was adjusted to the prime rate in February, which was 6%. Prime Option will adjust to prime again next Jan. 1, and each month thereafter.

"Initially, they came out and made a big splash," said Michele Turkel, cofounder of Spectrum International Consultants, Scarsdale, N.Y "But now you don't even hear about it."

Dean Witter is content to take the low-profile route to marketing its new card, using direct mail. In February, a multimillion-piece Prime Option mailing went out, and the second was scheduled for September.

"The response confirmed good consumer interest in Prime Option," said Bill Martin, president of Prime Option Services, the subsidiary in Sandy, Utah, created by Dean Witter to run the cobranded program.

"We will continue to refine marketing," he added.

To support the second mailing, Prime Option will run advertisements in selected markets to prompt consumers to open the solicitations. What consumers will find is a complicated package of benefits. Holders of the Prime Option card will be able to carry new purchases for up to 60 days at 6% (through 1994) before the rate jumps to prime (currently 7.25%) plus 9.9%. If a customer carries a balance and makes new purchases, he or she has to pay a blended rate, 6% for new purchases, and 17.15% on older balances. The card comes without a fee and provides a 25-day grace period on new purchases and cash advances. Customers who transfer balances carry a 6% rate for six months.

By targeting revolvers, Prime Option is going after about one-third of the market -- people who revolve 50% of the time, said Stephen Szekely, senior vice president of credit card research for PSI in Tampa, Fla.

In court testimony, Dean Witter said it wants to net 10 million to 15 million Prime Option cardholders, still far less than the 40 million Discover cardholders.

Almost everyone who has Discover also carries a bank card, said Bruce Brittain, president of the Atlanta research firm Brittain and Associates. "This may be a way of getting them to carry one of its own bank cards."

Few were surprised that NationsBank was the one to issue the Dean Witter card. Dean Witter and the North Carolina-based superregional had formed a partnership in 1993 called NationsSecurities.

"NationsBank is a risk taker," said Mr. Brittain. "They're willing to jump out and say, `Okay, we'll dance with you realizing you might jump ship on us.' But, Nations has said, `We think you'll stay in for the long term.'"

"We have the same corporate values as they do," said Mr. Martin of Dean Witter. "We're very pleased with our partnership."

Ms. Friars takes all the attention and controversy surrounding the Prime Option deal in stride. After all, the card services division, with $5 billion in outstandings and 4.4 million cards, has many other products to manage.

"NationsBank is a very aggressive marketer," Ms. Turkel said. "They've been hiring like crazy, doing acquisitions, implementing activation and usage-retention programs."

This summer, the Charlotte, N.C.-based bank kicked off its latest cobranded card, the Southern Living Visa, which will be marketed to the 13 million-plus readers of the regional magazine.

Nationally, it has established two cobranded programs, one a frequent flyer rebate card with USAir, the other, a long-term savings card known as START.

"Segmentation is the name of the game," Ms. Friars said. "Part of the benefit of segmenting is you can more carefully define consumers' needs.

"Consumers are looking for value -- that is a message you see across the board. Different segments define value differently."

Through its web of nearly 2,000 branches in nine southern states, NationsBank tailors card offers further. The bank has cards that range from prime plus 3.9% to prime plus 9.9%, plus targeted, relationship products with special pricing and certain benefits. For example, the Select card comes without a fee, at prime plus 8.9%. Certain branches offer cards tied into other banking services.

"We want to make sure we're rewarding our customers who use our products," Ms. Friars said. "Customers like that."

Ms. Friars, 44, has spent a lot of time researching what consumers want. A former consultant, she joined C&S/Sovran Corp., before it became part of NationsBank, in 1990 as a senior executive vice president.

"I think Eileen is one of the bright people in consumer banking," said Alex W. "Pete" Hart, executive vice chairman of Atlvanta Corp.

"She has taken over NationsBank's card business at a very exciting time," added the former MasterCard International president. "NationsBank clearly wants to be one of the top three players. I think their partnership with Dean Witter is probably consistent with the partnerships that will evolve in the industry over the next five years or so. I think that will prove to be a very powerful one."

"In general, what do [competitors] think about NationsBank?" Ms. Friars asked herself. "They think that we're aggressive and worry what we are going to do next."

She added confidently, "There will be more."

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