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CITIBANK CREATES INNOVATIVE CREDIT CARD PRICING FORMULA; OFFERS LOW VARIABLE RATE BASED ON PERFORMANCE

 CITIBANK CREATES INNOVATIVE CREDIT CARD PRICING FORMULA;
 OFFERS LOW VARIABLE RATE BASED ON PERFORMANCE
 NEW YORK, April 16 /PRNewswire/ -- Citibank announced today that beginning June 1, it will automatically upgrade its most highly qualified Classic and Preferred Visa and MasterCard customers to Premier Membership, which, along with other benefits, will provide a pricing formula based on the overall customer relationship with the bank, that will lower interest rates to 15.9 percent and 13.9 percent, respectively.
 Customer relationship evaluation is based on longevity with the bank, payment history and usage. To qualify for Premier Membership and earn the new variable rate, cardmembers must have an account for 12 months or more, consistently manage their accounts responsibly by making timely payments and staying within their credit limits and have total purchases since the account was opened of at least $1,000 for the Classic card and $3,000 for the Preferred card. The lower rate will apply to purchases added after June 1. Older balances will be paid off first at current rates.
 Customers will automatically qualify based on the history of their accounts through March 1992. Citibank will begin notifying cardmembers of their Premier Membership at the end of April.
 Citibank said it has examined and tested various pricing alternatives to find the one that is best for the broad mix of its customers and the risk characteristics of the portfolio. "Premier Membership with performance-based pricing means we're able to reward customers who have demonstrated their credit reliability, without abandoning the mass market or jeopardizing the credit worthiness of our portfolio," said James L. Bailey, executive vice president in charge of North American Consumer Banking. "We've always believed that credit cards should provide consumers with broad-based access to credit. Performance based pricing allows us to do this and put the cost of risk where it belongs. Eventually, we believe an increasing portion of the industry will adopt this pricing structure because its flexibility is better for customers and gives issuers a continuous analysis of their portfolio risk."
 Customer payment behavior will be reviewed quarterly. Citibank said an occasional problem will not disqualify customers from the lower rate; however, customers who show a pattern of chronic lateness will lose the low rate and all balances will be charged a 19.8 percent rate until the lower rate is re-earned through timely payments for 12 consecutive months.
 The bank said the variable rate, which is adjustable quarterly, will be determined by the Prime Rate, as published in the Wall Street Journal, plus 9.4 percentage points for the Classic card and 7.4 percentage points for the Preferred card.
 Bailey noted that approximately 9 million cardmembers immediately will qualify for the lower rate and that any cardmember can potentially qualify. Citibank will review its entire customer base quarterly to identify additional cardmembers who have earned Premier Membership.
 "With this new formula we've done everything a bank can do to put control of pricing in the hand of each individual customer. We'd like to see all of our customers earn our best rate."
 -0- 4/16/92
 /CONTACT: Susan Weeks of Citibank, 212-559-0580/ CO: Citibank ST: New York IN: FIN SU: PDT


SM-TS -- NY006 -- 9077 04/16/92 08:30 EDT
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Publication:PR Newswire
Date:Apr 16, 1992
Words:539
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