CSCU Annual Meeting“Journey to Success”

May 3-6, 2001

R. Frank WeidnerUnited Airlines ECU

Achieving Card Penetration

R. Frank Weidner

United Airlines ECU

$50$55$60$65$70$75$80

$Mill

ion

s

Credit Card Balances

Discovery

Card Penetration By Credit Score

Discovery

0%

5%

10%

15%

20%

25%

30%

500

530

560

590

620

650

680

710

740

770

800

% o

f M

em

be

rsh

ip

Classic Platinum

Avg. Card Balance by Score

1,0191,511 1,514 1,396

756

2,298

3,771 4,0303,295

1,336

0

1,000

2,000

3,000

4,000

5,000

0-549 550-599 600-639 640-699 700+ Credit Score Range

Classic Card Platinum

Discovery

Breakeven Interest Rate

11.4%

9.4% 8.9% 9.2%8.3% 7.8%

6.6%

14.8%

10.3%

13.2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0-549 550-599 600-639 640-699 700+

Inte

rest

Rat

e

Classic Platinum

Discovery

• Increase Penetration across all scores

3,000 New Accounts ( 6.25% )

• Increase Balances / profitability

$10 Million New Balances ( 18% )

Goal

Performance Pricing + Intro Rate

Strategy

Credit Grade

Intro Rate

Fixed Rate

A 0.0% 10.9%

B 0.0% 12.9%

C 6.9% 15.9%

D/E n/a 19.9%

• Non Card Holders:– Target Mailing A, B, C members offering new rates + Intro.

– Application + Balance Transfer Form

– 0.4% discount for automatic payment

• Existing Card Holders:– Letter checks if available > $1000

– Offer 0% or 6.9% intro rate for 6 months

– No drop in their rate unless they apply for line increase

– 0.4% discount for automatic payment

– Reprice existing D/E cardholders to 19.9% to cover cost.

Strategy

• 6,000+ New Accounts ( 12%+ growth)

• Strong Response Rates– A credit = 9.9%

– B credit = 9.5%

– C credit = 8.3%

• $20 Million New Balances ( 30%+ growth)

• Retention of 65% of New Balances ($14m)

Results

Credit Card Balances

Results

$50$55$60$65$70$75$80A

pr-

99

Jun

-99

Au

g-9

9

Oct

-99

Dec

-99

Feb

-00

Ap

r-00

Jun

-00

Au

g-0

0

Oct

-00

Dec

-00

Feb

-01

Ap

r-01

$Mill

ion

s