NEW YORK (AP) — Asset manager Ameriprise Financial Services Inc. is pairing up with MasterCard Inc. to become a credit card lender for the first time, the two companies planned to announce Monday.
For Ameriprise, whose more than 2 million clients are mostly wealthy, underwriting looks fairly low-risk. Meanwhile, the benefits are luring and retaining customers through rewards programs, said Abu Arif, vice president and general manager of payments and deposits for Ameriprise Bank.
"The timing for us is actually pretty good," Arif said. He said Ameriprise considered many card processors but MasterCard's World Elite program - which offers perks such as airport club access and the luxury travel service Virtuoso - were particularly attractive selling points.
And for MasterCard, the advantage is gaining a bit more market share in the affluent segment. Card processors like MasterCard and Visa earn their profits from the fees they charge card issuers and merchants for using their network. The more cardholders spend, the more money they make.
"The affluent segment is one that MasterCard has been making investments in as a customer segment," said Bill Mathis, MasterCard's executive vice president of relationship management. "Ameriprise Financial is a natural in that regard - they do appeal to customers at the higher end of the income spectrum."
Financial terms of the deal were not disclosed.
Ameriprise will issue its clients both MasterCard credit cards and debit cards. The credit cards will have interest rates ranging from 7.5% to 11%. The credit lines will vary widely, depending on the client, and many will have no preset spending limits.
