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GOOD NEWS FOR CONSUMERS: NEW PROGRAM FOR 'GRADUATING' SECURED CARDHOLDERS TO UNSECURED CREDIT CARDS

 HAVRE DE GRACE, Md., July 27 /PRNewswire/ -- What happens to consumers after they've established -- or re-established -- a good credit record by using a secured credit card? Is there any way for them to switch to a traditional (unsecured) credit card and thereby benefit from lower costs?
 One bank has such a system. Key Federal Savings Bank, in Maryland, has developed a new program in which secured credit cardholders who maintain an excellent payment record can "graduate" to an unsecured card in as few as 30 months. The unsecured card features a lower annual percentage rate (APR) and a lower annual fee.
 A secured credit card is simply a standard MasterCard or Visa card that is backed by the cardholder's interest-bearing savings account, explained Robert M. Bouza, president of Key Federal's credit card subsidiary and a senior vice president of the bank; the card's credit line is "secured" by the savings deposit.
 "We offer both unsecured MasterCards and Visa cards with a lower APR and a lower annual fee than our secured card," he said. "And, when Key Federal secured cardholders graduate to the unsecured card, they will no longer be required to maintain a savings account tied to the credit card."
 The criteria for graduating to the unsecured card includes maintaining an excellent payment record on the secured card for at least 30 months, no downturn in the cardholders credit history, no excessive financial obligations and a minimum annual income of $15,000. When a consumer's unsecured card has been approved, the new credit line is based of his or her gross annual income.
 Noting Key Federal's experience as the national pioneer of secured credit cards, Mr. Bouza said, "We got into the secured card business on a national scale to help people who might otherwise not qualify for credit because they are just starting out -- or starting over.
 "Now, we're helping them take the next step: once they've established a good credit record for two-plus years with our secured card, it will be a good deal simpler for these responsible cardholders to transfer over to our unsecured card."
 Key Federal has published a free 24-page consumer guide to personal credit
issues, "Managing Your Credit." It provides practical advice and explains how secured credit cards can help consumers. It's available with a toll-free phone call to Key Federal at 1-800-228-5757.
 -0- 7/27/93
 /NOTE TO EDITORS: Photos, interviews available./
 /CONTACT: Frank Carollo of McKamy Marketing Communications, 212-953-2290, for Key Federal Savings Bank./


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Publication:PR Newswire
Date:Jul 27, 1993
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