PICK A CARD, ANY CARD.

As anyone who has any amount of credit history can attest to, which virtually means anyone between their teen and pension years, credit card companies have become a constant, and seemingly unending fact of life. Indeed their sheer multitudes of correspondence would have many believing that credit card options are almost as plentiful as sand crystals in the desert. Promises of special offers, discounted rates or other incentives understandably have the prospective consumer either excited, anxious, worried, overwhelmed, or any combination therein.

Once a unique marketing prospect, today, when looked at in their entirety, the combination of credit cards, rewards cards, travel cards and affinity cards have become so prevalent that it's almost more feasible to describe cards that are not presently available.

Just in sports cards alone there is a NASCAR Visa, which features images of race cars and entitles the card bearer to a free T-shirt after the card's initial use. Or you could possess affinity cards for your favorite NHL or NFL teams through the NHL MasterCard or NFL Visa Cards. The two-time defending World Series champion New York Yankees have an affinity card of their own, where card holders receive two tickets with the card's first usage.

Sandi Bergen, vice-president of marketing and product development for CUETS, which provides MasterCard, card issuing and merchant acquiring services for Credit Unions coast to coast, says that the reason we are inundated with so many credit card and reward card options is to allow the consumer to find something that they like and hence become a valued customer. "There are so many schools of thought among consumers," she says. "And everybody is trying to come up with a unique selling proposition."

"Let's face it," she continues. "A credit card is a credit card is a credit card when it comes right down to it. It does the same core function. So everybody is looking at 'How can we differentiate our product to make it stand out in the marketplace?' It's a commoditized business now."

Acknowledging there are many different types of cards to choose from, Bergen says that each of these types fills a distinct need in the marketplace. "There are some people who don't value the loyalty component," she admits. "Some people all they would want is a no-fee playing card; very utilitarian. Others would want a gold or a platinum card, and they're not worried about that loyalty. They just want to flash that prestige card."

Certainly among the leaders of this loyalty industry is the Air Mile Rewards Program. Launched in 1992 with 13 sponsors in Canada, AIR MILES has become the foremost authority on loyalty and rewards programs in Canada. Currently about half the households in the country are home to an AIR MILES collector. Likewise, the number of sponsors have grown substantially from that initial 13 to well over 100 establishments nation-wide, representing about 12,000 locations.

"The basic premise of the program since its inception in 1992 is three-fold," says Joe Palombo, senior director of marketing with The Loyalty Group, owners and operators of the AIR MILES Rewards Program in Canada. "Number one was to reward consumers for doing their everyday shopping at a sponsor.

"The retailer wins because they now can create loyalty for their customer in a competitive environment," he continues. "And then as a company, we benefit because what we do on behalf of our sponsors and collectors is manage the program, and we make money for doing that. But we only make money if we're creating value for the consumer on behalf of our sponsors.

Palombo emphasizes that the program is working based upon its growth over its nine years. Aside from now being available at more than 100 sponsors across Canada, AIR MILES has more than 6.6 million active collectors in the reward program nationally. The AIR MILES program appears to be particularly popular in Western Canada, where approximately 70 per cent of households contain AIR MILES collectors. As well, there are now more than 100 different rewards in the program, where as its original rewards were those relating to travel only, including flights and hotels.

Palombo says that the expansion of the rewards offered was due to demand. "We stay very, very close to our collectors," he says. "We're constantly doing research with them and talking with them. We receive over five million calls in our service centre to service those collectors each year. And we listen to them."

Comparatively, CUETS also originated as demand warranted. CUETS, which stands for CU Electronic Transaction Services, began as a Saskatchewan initiative in 1982, but became a national entity very quickly after start-up. Choice Rewards came to fruition in 1996 after CUETS already had a well-established national client base. But with its head office in Regina and it being a joint venture of the Credit Union Central of Alberta and Saskatchewan, Bergen says CUETS is very proud of its Saskatchewan origin and prairie roots.

"In the mid-'90s it became really clear to us that loyalty programs attached to plastic were becoming very, very popular," says Bergen. "We to k a look at it and we said, 'What can we do to make sure that we're enhancing the competitive capabilities of our credit unions and what kind of a loyalty program can we structure that is not only competitive, but that in many ways is perceived to be better than what in the marketplace?'"

"In 1996 we launched what is now called Choice Rewards," Bergen offers. "It's similar to many loyalty programs in that you accumulate points base on dollars spent on the card. The difference with our product is that you hay the choice of redeeming those reward points for merchandise from a catalogue or for travel."

Programs such as Choice Rewards and AIR MILES all boil down to one common denominator -- to provide a competitive edge in a highly competitive industry. This edge will in turn develop a sense of customer loyalty, which benefits the sponsors, who primarily pick up the tab for these reward products or services.

"I don't think it's affected consumer pricing of goods," Bergen says of rewards programs, going on to clarify that all programs are not universal. "There are cases where there is a direct cost to the consumer because in a lot of the programs you get points based on what you pay for your card product."

According to Statistics Canada, Canadians carry $144 billion in credit card and installment debt overall. The average debt load for Canadians in this capacity is $3,000, while the median amount is $1,800. By comparison, vehicle loans account for $29 billion in debt and student loans compose $15 billion in debt.

Interestingly, this debt load is not exclusive to one age category particularly. Although those who comprise the middle aged are certainly the highest among credit card debtors. About half of the people aged 25-44 carrying some type of credit card debt. Comparatively, 36 per cent of the people under 25 carry credit card debt, 42 per cent of people 45-54, and 33 per cent of people 55-64 also carry credit card debt. This figure diminishes to just 15 per cent of people over 65 who have credit card debt.

Sharon Wilks, manager of media relations with Canadian Bankers Association, says that people should determine their specific need before making their decision about reward cards. For instance, she says if people don't travel much, an airline card is likely not the best option. Or if they never use a rental vehicle, having vehicle rental insurance free automatically on your credit card is not much of an incentive.

"If you're paying off your balances every month, and you don't want to use a lot of the reward cards that are out there, your best option might be a credit card with basic benefits," she continues, adding that approximately 50 per cent of cardholders pay off their balances each month. "If you tend to carry a balance all the time, you might want to look at low cost cards."

Not one to stand by without taking proactive measures to ensure its market share, CUETS is on the verge of changes which will serve to better suit their clients. Without revealing anything specific, Bergen says that Choice Rewards may be tied more intensively with Credit Union banking services or may expand its services to complement local merchants.

"We're looking at a number of options right now and we expect to do some significant changes to the program this year," she says.

Although there are obvious exceptions and specific circumstances for each case, a general rule of thumb regarding a regular or typical rewards program is a one per cent return on investment; meaning in this situation if a person spends $100, they receive one dollar worth of points, or a one-dollar value.

What often happens, as is the case with CUETS, is that a basic card will accrue rewards points at a curtailed rate, while a premium will be charged for a card that produces points at an accelerated rate. Therefore, an argument can be made that these rewards are not entirely "free."

The Loyalty Group's revenue is derived from every AIR MILES reward mile issued by sponsors. "The Loyalty Group only makes a profit if we add value to the consumer on behalf of the sponsors," says Palombo. "And that's the premise that we started the business on -- to reward consumers for their everyday shopping."

But the additional benefit to sponsors is their ability to deepen their relationship with their customers. The Loyalty Group gathers, processes and analyzes data on a continuous basis to develop loyalty-driven programs to build customer loyalty. This offers AIR MILES sponsors a distinct, competitive advantage from a business perspective.

The AIR MILES Reward Program collects only three types of data about their sponsors' respective customers: who they are; where they shop and how many AIR MILES reward miles go into their account -- the same information collectors see on their quarterly account summaries.

"We use that information to help our sponsors understand who their customers are. Then we jointly develop marketing programs to engage those customers and deepen their loyalty to the coalition of sponsors and their products or services?'

"Our reward redemptions have been growing exponentially in terms of the number of rewards we give every year, Palombo notes. "In the last three years we've had 26 new sponsors join the program. We've just issued our nine billionth mile." Indeed the rewards keep growing as does the list of consumers, rewards and sponsors. Last year alone the AIR MILES reward program issued more than 1.8 million rewards.

It appears the inundation of credit card options in today's marketplace, will, for the time being, remain headed down the path of status quo until a saturation point will cause some form of plateau. As for card options like the Star Trek MasterCard, which you can use for Star Trek conventions and memorabilia, and the Caesers Palace Card, they, like the bevy of other unique card options, will either thrive or falter as demand dictates.

"Only the strong will survive," says Bergen, implying that we've certainly not seen the last of targeted credit card considerations. "Everybody will continue to look for unique value propositions."

                   Credit Card Statistics - Visa and
                               MasterCard
                                       1977    1988     2000
Number of cards in circulation
(millions)                              8.2    19.4     40.1
Sales slips processed (millions)      118.8   490.0  1,184.7
Average sale                         $30.46  $61.90   $95.57
Retail sales volume (billions)        $3.61  $30.33  $109.87
Number of accounts with outstanding
balances                                N/A     9.5     18.5
Outstanding balances (billions)       $1.38   $7.84   $33.90
Fraud losses (millions)                 N/A  $15.63  $156.38
Source: Canadian Bankers Association