HIstory Report

Essay by PaperNerd ContributorUniversity, Master's April 2001

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After months of problems, Bank One Corp. figures a key to fixing its credit card operation depends on the help of the partners like United Airlines, American Online and the University of Notre Dame. The bank's credit card business - the nation's largest - derailed last summer when competition drove it's introductory rates too low and customer service problems sent many higher paying customers away. Since the debacle, the bank's stock price has risen by half. Now a significant element in the Chicago bank's plan to stabilize itself includes expanding its partnerships with groups that want specialized credit cards for their customers and members. Bank One expects three - fourths of its new accounts in 2000 to come from such partnerships. In the cutthroat battle for credit card market share, cards sponsored by companies or organizations generally are the most valuable for issuers. A sector pioneered by a Delaware bank 15 years ago, sponsored credit cards proven to have a golden combination: They're more profitable and more risky than other cards.

Anything that promises profitability and stability is a godsend to U.S. card issuers, who are in a war for card holders.