DALLAS-FORT WORTH – The $4 billion American Airlines FCU's brand new credit card program will approach the one-year mark in November and there are indications the one-year mark will find it doing very well indeed. According to credit union marketing manager Jim Fry and card program staff, the new card program has 10,000 new accounts with outstanding balances worth roughly $27 million, well on its way toward having $40 million in outstanding balances by the end of the year. "Our members have reacted very strongly and enthusiastically to the card," Nancy Thomas, credit card manager said. "They have told us things like `thank you for doing this' and `we have wanted to be able to bring our card business to you' and comments like that," Thomas added. American Airlines is the last credit union of over $500 million in assets to start a credit card program and to do so from the ground up, making the credit union's effort an interesting window through which to study the challenges facing credit unions marketing their own card products. American Airlines is coordinating the brand new card effort with Certegy, the card processing firm headquartered in Alpharetta, Georgia, which recently announced a merger with processing provider Fidelity National Information Services (see related story page 1). Certegy processes the credit and debit card transactions for the credit union but leaves the marketing and organizational structure of the program to the credit union. Thomas said that one thing that has surprised her is how far reaching the card program has been into all the credit union's back-office operations. "In a way it shouldn't have surprised us because we lined it out on paper, what we would have to do to set up a card collections program or to handle other aspects of the card," Thomas said, "but when it actually comes to setting up the collections program, getting the staff involved, figuring out the procedures we would use, how to handle questions that would come up …. all of that was a lot more detailed than I imagined it would be," she said. The credit union has found a lot of success by making all of its card platinum cards which it has simply broken into a three tiered pricing scheme in order to begin some risk-based pricing, Thomas said. She also explained that the credit union's pooling of rewards points, a scheme whereby each dollar spent on the credit card earns a rewards point and every three dollars spent on the credit union's debit card earns one rewards point, has been very popular with credit union members – even though the rewards program on the debit card only begins if the member takes the credit card. "We are working toward applying the rewards program onto only the debit card," Thomas said, "but we just aren't there yet." But she also explained that the credit union has been aggressively committed to offering all of its members who are of age and who could otherwise have a credit card a chance to get the credit union's card. American Airlines has not segmented its 203,000 members into those who will be offered the card and those who will not, Thomas stressed, everybody gets a shot at having the card. Currently, the card program is about 6% penetrated into the credit union's membership and Thomas hopes that 10% of the credit union's membership will have the card at the top of their wallet by the end of 2005. Even though American Airlines has been aggressive about making sure it only issues a platinum card – albeit with three tiered pricing – Thomas explained that the credit union found it needed to offer more than one card design to meet the needs of its diverse membership that has different degrees of connection to American Airlines and the overall airline industry. "Many of our members have a connection to American Airlines, but not all of them," Thomas said. "Some have connections to competing airlines or even no direct connection at all, that's why we chose to offer a patriotic card design and a legacy card design which ties into aviation history." As the credit union gets ready for its first Christmas season postcard rollout, Thomas said the program is ready for the expected spike of spending that the period from late October through December will bring. "It's tremendous that our members have reacted as well as they have to our card, but we will be ready when the season comes," Thomas said. -

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