One of the nation's largest credit card issuers has expanded its partnership relationship by introducing a platinum card with one of the world's largest insurance companies.
The New York Life Platinum Visa Card, issued by First USA, is being offered to a segment of the company's life insurance policy holders solely through direct marketing. A direct mail effort dropped in late December, and the card will be promoted on the New York Life corporate Web site at www.newyorklife.com.
“We have launched with a preapproved offer,” said Thomas Nowlin, senior vice president for financial institutions marketing at First USA, Wilmington, DE. “A credit card opportunity allows New York Life to communicate on a monthly basis with policy holders, which they're not doing. It can also cross-promote their other products.''
New York Life corporate vice president Mark Lonnegren said the company will market products and services to its policy holders through messaging in monthly statements and special inserts.
“We're excited to increase brand recognition,'' Lonnegren said. “A billboard in people's wallets will be beneficial to our business. It should generate goodwill among policy holders.''
New York Life has offered a Visa card to its policy holders since 1988, but the new platinum card is considered an upgrade to a higher level of service. The no-annual fee card will feature a low introductory annual percentage rate of 4.9 for five months and then go to a standard APR of 13.99. All current card holders will automatically receive the platinum card as a replacement.
In addition, using the New York Life file, First USA conducts credit reviews and mails out preapproved applications to other qualified policy holders as well. For the New York Life account, First USA contracted out the list to database manager Database America, Montvale, NJ, and handled the design and printing of the application package in-house.
“We're viewing it as a sign of loyalty to our current [policy holders],'' Lonnegren said. Certain future policy holders also could be selected to receive the offer.
First USA, an affiliate of Banc One Corp., Columbus, OH, is the third largest provider of Visa, MasterCard and private label credit cards in the United States with 40.4 million cards issued and $38.9 billion in outstanding loans. Partnerships with financial institutions are a huge part of their business.
The creditor began forming partnerships in 1985 and now has more than 1,200 agreements, which make up 30 to 40 percent of the company's new business. First USA issues credit cards on behalf of 700 retail banks and has partnerships with investment banks Merrill Lynch and Edward Jones and mortgage lenders Countrywide Home Loans, Homeside Lending and Capstead Mortgage.
“For all of our partners, an excellent credit offer is a nice value-added offer that they won't receive from anyone else,'' Nowlin said. “And again when it comes from New York Life, it enhances value perception policy holders have with them.''
These partnerships, which also include agreements with America Online, Southwest Airlines, Holiday (Inn) Hospitality, AARP and Honda Motorcycle, are the cornerstone of the strategy of segmentation that First USA uses to target and attract new cardholders.
“The primary benefit is to leverage the brand equity of a product name,'' Nowlin said. “The extent of additional segmentation certainly enhances the overall marketing effort, but with insurance companies [like New York Life] it's more difficult to obtain this information.''
Lonnegren said the card will not be used to prospect for customers. That traditional function will be left to New York Life agents.