Simply Flexible, a range of credit cards which reward customers
with lower interest rates when they pay more than their monthly
minimum payment. It is promoting the product launch with an ad
campaign designed to appeal to financially responsible cardholders,
writes Douglas Blakey.
Amid growing fears of a US recession and with credit card
delinquencies rising inexorably, TD Banknorth (TD), the US retail
banking arm of Canada’s Toronto-Dominion Bank, has introduced
Simply Flexible, a range of credit cards designed to appeal to
low-risk customers.
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TD has also kicked off an integrated marketing campaign designed to
educate cardholders about the control they can exercise over their
credit.
In an interview with RBI, James Gaffney, executive vice
president of card services at TD Banknorth, said: “Simply Flexible
is not the first interest rate-based reward card in North America,
but it is a unique product in today’s market.”
TD’s new cards will go head-to-head with an offering from Discover,
the fourth-largest US credit card issuer. Its Motiva card,
introduced last March, has been designed to give consumers cash
rewards for good credit management. Each time Motiva cardholders
make on-time monthly payments six times in a row, they receive
their next month’s interest back as a pay-on-time bonus.
Greater control
TD’s new Simply Flexible and Simply Flexible Business Visa products
offer cardholders the option to select the rate of interest paid,
depending on the amount of their monthly payment, with customers
who pay a minimum of 10 percent of their monthly balance paying a
low rate of 7.99 percent.
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By GlobalData“From our research, customers told us they would like to have
greater control over their finances and be rewarded for financially
responsible decisions. TD is always looking to improve upon the
customer experience, and our new line of credit cards provided us
with an opportunity to respond to customer feedback while enhancing
relationships with existing customers,” said Gaffney.
TD has also introduced Easy Rewards Platinum, a points rewards card
with no reward limits, and Cash Rewards Platinum, a cash-back
rewards card.
All of the new cards offer 0 percent interest for up to six months
on eligible purchases and balance transfers, as well as no annual
fees, 24/7 emergency assistance, emergency card replacement,
lost/stolen card reporting assistance, auto rental collision
coverage, and damage waiver programme.
“Simply Flexible is a win-win for customers. When they choose to
pay more than their minimum monthly balance, they’re rewarded with
lower interest rates, the option of paying off their balance sooner
and receiving a positive reflection on their credit rating,” said
Tom Dyck, executive vice president of retail product management for
TD Banknorth. “We’re excited to be one of the very few financial
institutions to offer a flexible-rate credit card that truly puts
the customer in charge.”
Having successfully avoided the mortgage subprime-related writedown
suffered by its peers, reporting a 44 percent rise in
fourth-quarter profits and a 24 percent increase in net income for
the fiscal year 2007, TD’s targeting of financially prudent credit
cardholders is entirely consistent with its conservative
risk-reward profile.
One critical domino effect from the subprime fallout – which TD has
so far managed to avoid – is a marked rise in bad credit card debt.
Major card players are starting to reveal weaknesses in their card
portfolios: Capital One, for instance, announced on 10 January that
it had set aside $1.9 billion for bad loans in the fourth quarter
of 2007, boosting its forecast for full-year charge-offs to $5.9
billion; even American Express, which has targetted only the prime
and affluent segments, has said it will take a $440 million charge
to boost reserves for bad loans.
TD’s card launch is being promoted with an integrated advertising
campaign, created by media agency Via Group, with a TV ad spot that
features rock group Supertramp’s 1979 hit Goodbye
Stranger, a repeat of the bank’s successful 2006 campaign used
to introduce its ‘hassle-free’ product offerings, which include no
ATM fees, extended branch hours and lower banking.
“We are promoting our suite of credit cards to our current customer
base in our New England and mid-Atlantic footprints with a
multi-media advertising campaign that includes television, print,
online, direct mail and in-branch marketing. Our credit card
advertising will target our current customer base; however, both
customers and non-customers may apply for TD Banknorth credit
cards, and both will have access to the same offers,” added
Gaffney.
The ads have been developed to get over the message that the new
cards can remove one of the hassles of banking, namely high
interest rates.
“Our Simply Flexible advertising was developed to simply
communicate a benefit that we think will be game-changing for both
consumers and the financial services industry – a credit card that
puts users in control of their interest rates and actually rewards
them for paying down their balance,” said Dyck.
According to media consultancy Neilsen Monitor-Plus, TD spent $7
million in US advertising in the first ten months of 2007.
