Charles Schwab & Co.'s bank subsidiary is offering a credit card to the San Francisco company's 7.5 million brokerage and banking customers.
Charles Schwab Bank of Reno opened its doors early last year and began researching credit card deals by the beginning of this year. The Schwab Bank Visa card, which it began offering Wednesday, is issued through MBNA Corp. It carries no annual fee, a variable interest rate of prime plus 1.7% (which came to 6.49% on Wednesday) and a choice of cash or travel rewards.
Thomas Knobloch, a vice president at Schwab Bank, said in an interview that it chose not to offer a zero-percent introductory rate, because "a lot of those offers are gimmicky." Most of the parent company's customers are brokerage account holders, and the card offers features designed to appeal to that group, he said. For example, they can view their card statements when they log into their brokerage accounts. Eventually, Schwab will let customers view bank, card, and brokerage accounts with a single log-in, he said.
All purchases made at the Schwab brokerage on the card earn two points per dollar; other purchases earn one point per dollar. Mr. Knobloch said he expects customers to use the card to pay for things like brokerage fees and financial consultations.
Customers can use points to get cash rebates, airline tickets, or free trades. Five free Schwab trades cost 12,000 points. Schwab conducted extensive research on what customers look for in a credit card and whether they would be receptive to a Schwab card, Mr. Knobloch said. Some other brokerages already offer credit cards, he said.
