IMGCAP(1)]
Discover Financial Services likes to look for ways to distinguish itself from rival card companies. Last year it found another way to do so, launching a card that helps consumers with outstanding card debt to pay off their balances in a consistent and more-timely fashion.
Discover's purple Motiva Card offers customers with revolving balances a bonus of one month's interest back each time they make six consecutive on-time payments.
The initiative earns Discover the 2008 Cards&Payments Best in Payments award for Best New Product.
"We feel [Motiva] clearly demonstrates how we're doing things differently as a company." says Kelly Tufts, Discover director of new product marketing.
Motiva's concept certainly has the potential for widespread appeal. Nearly 50% of U.S. consumers revolve their credit card balances, meaning they do not pay them off in full each month, Cards&Payments research shows (C&P's Exclusive Bankcard Profitability Study and Annual Report, May).
Discover conducted research to determine which types of services or products might appeal to revolving cardholders. "We're always looking and talking with customers," says Tufts. "You learn from customers what they want, and then you present them with ideas."
The research found that revolvers are interested in rewards that are meaningful, according to Tufts.
Discover developed the plan to give a month's interest back to customers as both a reward and as an encouragement to cardholders to pay off their balances in a timely fashion. "The interest back can help them achieve their goals," Tufts suggests.
The card company says it is encouraged by customers' interest and participation in the Motiva Card interest-back program, although it would not disclose how many customers the incentive plan has helped encourage to make punctual payments.
"We're meeting our projections, and our customers are very excited to get a reward for something that's so easy to do," Tufts says.
Discover applies the one-month interest payback program only to customers with unpaid balances. Cardholders who pay off their credit card bills on time are not eligible.
Cardholders can earn the interest-back bonus, which Discover initiated in March 2007, twice a year, if they make punctual payments on their bills. Those benefiting from the so called "pay-on-time bonus" also are eligible for Discover's regular cash-back program that pays a percentage–usually 1%–of all purchases made with the card.
The interest that revolving cardholders owe is listed on their monthly statements. The program is flexible in that it enables cardholders to pay off whatever amounts they want during each of the six months leading up to the interest-back reward, as long as they pay at least the monthly minimum amount due on their bill. The key is not how much is paid but that the payment is made on time.
Discover reminds customers by e-mail when payments are due. If a Motiva cardholder wants to pay but does not have access to a computer, Discover waives its $10 fee for using a customer-service representative to pay by phone.
Consumers may use the Motiva Card to make everyday purchases. But the card company targets especially those individuals who maintain a revolving balance.
Discover, of course, did not launch the Motiva payback program just to be magnanimous. "We definitely saw this as an opportunity to bring new consumers to Discover Card products," says Tufts. CP
