Old Kent Financial Corp. has bolstered its small but growing credit card program by adding a frequent-flier enhancement.
With CardMiles, launched Jan. 1, Old Kent Visa and MasterCard holders can earn $100 off any U.S. airfare for every $5,000 they spend. Most frequent-flier programs award tickets at the 20,000 to 25,000 level.
The Grand Rapids, Mich.-based bank partnered with United Bank Services, a Norman, Okla., enhancement provider, to offer CardMiles without an additional fee. The bank's 200,000-plus cardholders are enrolled automatically.
Like other affinity airlines cards, Old Kent cardholders earn one CardMile for each dollar of net purchases charged.
Cardholders can use or combine $100 certificates for travel on any airline, domestic or international. Once they collect four certificates, at 20,000 points, cardholders can redeem them for a free ticket for travel within the 48 contiguous United States or receive $350 off a ticket to any destination.
Cardholders have three years to use the certificates, and can do so without blackout days. The maximum point accumulations are 10,000 per month and 60,000 in 12 months.
"It appears to be a better deal for the consumer," because it allows greater flexibility, said Stan Dale, editor of the Phoenix-based newsletter Mileage & Points.
"You don't have to wait three or four years to save up enough money just to get a free ticket," pointed out Darrell G. Rickman, vice president and general manager of Old Kent Card Services.
Recently, First of America Bank Corp. launched the FirstAir Visa card, which also gives cardholders a choice of domestic airlines. FirstAir cardholders earn 5,000 bonus points with their first purchase, and have to reach 25,000 points to redeem a ticket worth $500.
More banks, including Bank One and Star Bank, are moving to bonus point structures that allow cardholders to get money off tickets from any airline.
"It seems to be some of that is coming out with greater frequency," Mr. Dale noted. "I suspect it's due to the success both American Express has had and Diners Club has had with their two programs," Membership Miles and Club Rewards.
Old Kent is one of the first banks to offer a program as an enhancement to its existing program.
"We see it as a retention, activation, and acquisition strategy rolled into one," Mr. Rickman said.
As a bonus, the bank will credit cardholders with 500 CardMiles. To attract new customers, Old Kent is offering 1,000 points when the card is activated with a purchase. Also, all cardholders will have the opportunity through March to earn a maximum of 3,000 bonus points for balance transfers.
In 1994 the bank doubled its outstandings to about $150 million. The enhancement provides a way to add new cardholders as well. The goal is to add 80,000 accounts in 1995, concentrating on customers outside of the bank's Michigan-Illinois region.
MasterCard and Visa cards, gold or standard, carry a $38 annual fee, waived the first year, with a rate of prime plus 3.8% (or 12.3%); or no fee with a prime-plus-8.8% rate.
Old Kent plans to offer the CardMiles program to merchants in its $3.2 billion acquiring program. "The idea is to get merchants to ask for Visa and MasterCard more often than cash or checks," Mr. Rickman said.
And it may add it to its checking account programs as a way to reward customers for maintaining balances.
"We're a fairly cautious bank," he added. "We want to make sure we can do it and do it right."