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Surfing for credit
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August 24, 1998: 4:09 p.m. ET
Credit card companies step out to meet their customers online
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NEW YORK - Looking for a new credit card? Start surfing.
Credit cards are popping up all over the Internet. Banner ads court customers with low annual percentage rates, no annual fees and fast and easy, online applications. And more banks are adding online account access and applications to their sites.
"A credit card with Internet functionality is no longer a novelty," said Chris Musto, senior analyst at Gomez Advisors. "When you see one of these ads, don't be surprised. Don't be amazed. This is par for the course."
With the Internet population growing every day, don't expect too many credit card issuers to sit long on the sidelines.
"They're all going to end up doing this," said Jim Bruene, editor of The Online Banking Report, a newsletter. "(Banks) are going to want to keep up with the Joneses."
Consumers get more choices
All of this online buzz boils down to more choices for consumers. But be sure to study those offers carefully. Is that eye-popping annual percentage rate a teaser rate and only good for six months? Does it apply to purchases, cash advances or transferred balances? What rate does the card jump to after the introductory period ends? Does the card have an annual fee? What kind of penalty fees comes with the card?
The Internet has its share of bogus credit card offers, as well. A telltale sign is a credit card that asks for a fee up front.
"We hear a lot of complaints from consumers about bogus offers for credit cards that are promoted over the Internet," said Susan Grant, director of the National Fraud Information Center.
"What distinguishes these promotions whether they're by the Internet, or any other way, is you need to send a fee in advance to get a credit card and then, of course, you usually don't get anything. I don't believe legitimate credit card issuers require fees up front. Usually if there's fees for the credit card, the charge appears on the first bill."
Watch how you say it
One other thing to watch for: "If you're asked to provide any information via email you should not do it," Visa spokesman Greg Jones said. "Any legitimate financial institution should provide you with the ability to key information on the web page itself."
Be sure to check out a company's security measures. Most sites use a technology called Secure Sockets Layer (SSL) or a similar encryption scheme that scrambles and encodes information sent over the Internet.
And if you're still uncomfortable about sending private information like address and salary and social security number over the Internet, there's always the telephone. Most issuers still take applications over the phone.
Should you click through a banner ad, and find a card isn't what it was cracked up to be, keep surfing. Chances are there's a better deal out there.
"The Internet is an incredible tool for shopping for financial services," Musto said. "Use it to find the best deal."
The cards
Some cards aim for the heart. Affinity card offers, targeting everyone from sports fans to animal lovers and Porsche owners, are all online.
Other offers shoot straight for the wallet. Capital One (COF) is wooing new customers with a 9.9% fixed annual percentage rate. The Yahoo! (YHOO) Visa platinum by First USA, which boasts a 9.99% annual percentage rate, or APR, targets online shoppers with rewards program with online merchants like Amazon.com (AMZN), CDnow (CDNW) and Toys.com.
Still others hope to appeal to the burgeoning Net head population with co-branded card deals with the likes ofAmerica Online (AOL), CompuServe, Intuit (INTU) and even E*Trade (EGRP).
The NextCard Visa, issued by Heritage Bank of Commerce of San Jose, Calif. has gone so far as to call itself the "first true Internet Visa."
Completed applications receive a response in less than 30 seconds. Upon approval, customers are presented with four card options with varying terms -- including interest rate and credit lines -- based on their credit profile. As with the Yahoo! Visa, AT&T (T) Universal Card and others, NextCard customers may view account transactions online.
Its latest hook is a rewards program that allows cardholders to earn bonus points toward travel on seven different airlines, or points for merchandise at several online and offline merchants including The Gap (GPS), Barnes & Noble (BKS), and MCI (MCIC). Customers who carry a balance earn double rewards points.
"People will be falling all over themselves to get your business, just the same as in the mail," Breune said.
Huntington National Bank added credit card account access to its web banking in late July, after repeated requests from customers.
Hillary Jeffers, vice president of public relations at Huntington, said most of the bank's Web banking customers are deposit account customers and they want to be able to view credit card transactions as well. The bank next plans to add online credit card applications.
"You have to find the customers where they are, and increasingly they are on the Internet," Jeffers said. 
-- by Bank Rate Monitor for CNNfn
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