BofA Launches New Credit Card
The competition in the travel credit card market is set to intensify with the launch of new credit cards by Bank of America Corporation (BAC) in collaboration with Miami-based Royal Caribbean Cruises Ltd. (RCL). The two companies renewed their multi-year affinity partnership with the launch of credit cards, which will offer benefits to loyalists of the cruise company.
The new credit cards offer exclusive benefits and are aimed to meet the growing demand from frequent users of the Azamara Club Cruises, Celebrity Cruises, and Royal Caribbean International brands.
The travel related credit cards were designed keeping in mind consumers’ need for flexibility in using points for travel-related expenses. The recently unveiled cards provide ample flexibility in point usage and enhanced reward rates.
Card Characteristics
The cards – "MyCruise Rewards” – give cardholders the ability to redeem points not only with the cruise brand that they choose, but also across the other two brands in the Royal Caribbean circle.
Additionally, cardholders can earn concessions on cruise-related packages and redeem points for cruises, stateroom upgrading, specialty gifts, and onboard credit across Azamara Club Cruises, Celebrity Cruises, and Royal Caribbean International. Further, the cards offer double points for purchases on all three cruise lines and one point for every dollar used on making other purchases. All these benefits come without an annual fee.
Another novelty is that the credit cards provide a points-donation opportunity. Cardholders will be able to contribute the cash value of their points to each of the brands' non-profit associates. Celebrity Cruises has partnered with The Breast Cancer Research Foundation, while Royal Caribbean is associated with Make-A-Wish Foundation.
Conclusion
By issuing credit cards with better reward rates and additional new features, BofA is geared to further consolidate its foothold in the market. According to The Nilson Report, at present, BofA is the third largest credit card issuer by purchase volume in the United States, trailing JPMorgan Chase & Co. (JPM) and American Express Company (AXP).
Moreover, by offering bonus incentives, the company expects a significant increase in its deposits to sustain revenues, which was adversely affected by its plans to charge customers for debit card usage. This particular step by the company made many of its customers opt out of using its debit cards. The credit card incentives can hence, be viewed as the company’s strategy to win back customers.
BofA currently carries a Zacks Rank #3 (Hold).
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