
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, March 27, 1990                   TAG: 9003272192
SECTION: BUSINESS                    PAGE: B4   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE:                                 LENGTH: Medium

AT&T ENTERS CREDIT-CARD RACE

AT&T entered the hotly competitive credit card market Monday with its "Universal Card," a combination calling card and credit card that will give customers a host of free services including buyer protection, rental car insurance and warranty extensions on products purchased with the card.

The New York-based long distance company said that customers who get the card this year and continue to use it at least once annually, will not be charged annual fees - ever.

"We guarantee no annual fee for life, as long as customers use the card at least once a year," said Paul Kahn, president of AT&T Universal Card Services Corp.

The card, which initially will be marketed to AT&T long distance customers, also will give a 10 percent discount over AT&T's usual calling-card rates, the company said.

However, AT&T's initial annual percentage rate of 18.9 percent is no bargain, said Robert B. McKinley, publisher of RAM Research's Bankcard Update, a credit card newsletter. The AT&T credit card interest rate is adjustable and will float at 8.9 percent over the prime rate.

Industry experts had expected the telephone company, which has been studying the credit card business for three years, to offer its card at a discount interest rate to spur demand.

However, McKinley said that waiving the annual fee may be more attractive to customers, who accept the fact that credit card interest rates are high, but are consistently annoyed about having to pay for their plastic.

Meanwhile, the company's main competitors - Citibank and American Express - acknowledge that AT&T will present a formidable challenge and may further spur the "enhancement wars."

"It is really beneficial to the consumer in the long run," said William Ahearn, a Citibank spokesman. "We believe the marketing of credit cards today and in the future will be based on what services you can provide and what benefits you can provide. I wouldn't be surprised to see other people coming in with the benefits we've innovated."

by CNB