Star Bank Corp. has a lot to boast about lately.
Collin G. McKenny, senior vice president and manager of the card services group of Cincinnati-based Star, addressed a credit card conference in San Diego last month to share the good news:
Star Bank's TravelAccount, which is a multiairline, frequent-flier program, has not had one credit loss since it was launched in November 1993, and has performed well by other measures.
"I was stunned when I first saw (the performance figures)," said Ms. McKenny.
But she is not resting on TravelAccount's laurels. At the end of April, Star Bank launched a product that follows in the footsteps of Wachovia's Prime for Life card.
Ms. McKenny insists that Star did not simply copy its southern rival. "We have been planning this since the fourth quarter of 1994," she said. Wachovia introduced its product at the beginning of this year.
Star is offering a credit card with an interest rate based on the prime rate, now 9%. Star's annual fee, however, is $43 less than Wachovia's hefty $88 for the standard Prime for Life card, and $53 less than Wachovia's $98 gold card.
Ms. McKenny said Star's prime rate card is hitting the market at a time when consumers are tired of teaser rates, "which have run their course," she said.
Unlike Wachovia, which markets its credit cards nationally, Star Bank targets only eight midwestern states.
Ms. McKenny said TravelAccount's success is, in part, due to the fact that Star markets in its own backyard. Most of the several thousand TravelAccount customers already had other Star Bank accounts or products.
Star offers TravelAccount as a card enhancement that costs $25 annually, initially soliciting only Star bank customers.
TravelAccount is different from most frequent-flier programs because it allows cardholders to redeem points for tickets on any airline.
The program was developed by CUC International Inc., a credit card enhancement firm in Stamford, Conn.
Only a handful of banks, including Bank One Corp., have introduced similar programs.
So far, TravelAccount has outperformed Star's standard credit card accounts and the industry in a number of areas.
At yearend 1994, the average TravelAccount balance was $2,557 versus $1,866 for a standard Star bank account, and $1,748 for the top 50 issuers, according to The Nilson Report, an industry newsletter.
The average TravelAccount sale at yearend 1994 was $86 compared, with $80 for a standard Star Bank account.
Gold TravelAccount cards performed similarly.
In this category, the average TravelAccount balance at yearend 1994 was $3,481, compared with $3,225 for a standard Star gold card.
But TravelAccount trails a little in profitability, because of the cost associated with offering airline tickets.
The pretax return on assets in 1994 was 6.7% for TravelAccount and 6.9% for the standard Star Bank card.