Bank One Corp., which has issued affinity credit cards for AARP for 13 years, says that the rewards card the two introduced in September has proven to be the biggest draw within that product line for quite a while.
Executives with the Chicago banking company cite interest in the AARP Rewards Platinum Visa, which gives cardholders a 1% rebate on purchases, as evidence that consumers' eagerness for rewards is spilling over into affinity cards. It used to be that the affiliation with a worthy organization was the main selling point.
"We heard loud and clear from members" that they preferred a rewards card to a plain-vanilla affinity product, said Joseph McDonough, the senior vice president of relationship management at Bank One Card Services, in an interview last week.
At AARP's annual "member event" in Chicago last month, he said, 20 times as many attendees signed up for a card as at the 2002 meeting, when only a nonrewards card was offered. "We were very happy," said Mr. McDonough, who was at the event and said that it was attended by around 17,000 AARP members.
Bank One said last week that it had renewed its contract with the organization, which is based in Washington and promotes the interests of people over 50 years old. The new contract is for five years.
The dollar rewards tied to the AARP Rewards Platinum Visa card can be redeemed in $25 increments, either as cash or as a gift certificate to certain retailers.
Bank One executives predicted that consumer interest in rewards cards will prompt defections to its cards from those of other affinity issuers, including MBNA Corp., that typically do not offer such perks.
"If you look five years back in the affinity area, most people launched a card with a brand on it, like AARP, and felt that was probably good enough to acquire a good customer," said Tim Gallagher, the senior vice president of relationship management at Bank One Card Services.
But when the time came to re-sign AARP, Bank One decided it had to offer more, Mr. Gallagher said.
The bank's research into consumer preferences found that people like the feature but suspect that it often delivers less than advertised.
For instance, "Some cards say it is a 1% rebate, but it is not 1%," Mr. Gallagher said. Customers "don't like to be tricked."
AARP's Web site boasts that with the AARP Rewards Platinum Visa, there are "no spending-level tiers, like other cash-back cards," and that once customers spend $2,500 they can choose $25 cash back or a gift certificate. The distinction looks like a swipe at the Discover unit of Morgan Stanley & Co., which has been marketing a card that offers "up to 5%" cash back and has cardholders meet various criteria to get the full 5%.
The AARP Web site also advertises that the card has no annual fee, no telemarketing calls, and other features consumers said they wanted, Mr. Gallagher said. Nor do customers have to forgo their right to sue in favor of binding arbitration in case of disputes, a feature an AARP spokesman said has always been a part of the card.
Mr. McDonough asserted that rewards and other features it offered were the reason Bank One managed to retain the AARP account despite heavy competition from MBNA and others. The account is valuable to issuers because of the high number of 50- to 59-year-olds, who tend to be at their earnings peak during those years.
"Rewards were our idea," Mr. McDonough said. "It was before the renewal process, when we basically took it a step back and said, 'Put up a fresh piece of paper.' "
The executive who manages the cards program at AARP said the rewards card has attracted about 200,000 cardholders, some of them among the 1.2 million AARP/Bank One cardholders and some of them new customers.
"I guess I can't say it was any one thing" that made Bank One's cobrand offer stand out, said Bill Farris, AARP Services Inc. vice president. "We were just very pleased with the package Bank One brought to us."
