The 'blue-collar' credit card heads for UK

An American company is looking to launch credit cards in the UK, targeted at blue-collar workers and people on low incomes.

Metris, a company quoted on Nasdaq in New York, has said it is examining the possibility of issuing its credit cards over here.

Ronald Zebeck, chief executive of Metris, was recently in London to meet potential investors in the company.

The company has been established in the US as a credit-card issuer for just two years, during which time it has built up a customer base of 1.5 million card users, taking $1.6bn (pounds 98m) a year in receivables.

The typical income range for a Metris credit-card customer is from $15,000 to $35,000 - or less than pounds 23,000.

There are no figures available in the UK on the average income of card holders, but students and low earners can usually obtain credit cards. Metris's plan to target low-income earners partly reflects the saturation level of the credit-card market.

Mr Zebeck already has experience of the UK, having formerly been head of General Motors Worldwide Credit Card operations. At GM, he was responsible for overseeing the launch of the Vauxhall credit card, which gives customers bonus points towards the cost of a new car.

There are some 32 million credit cards in issue in the UK, alongside 32 million debit cards. These include loyalty cards, store cards, and cards issued by the high-street banks.

However, Metris may find the competition hard going. NatWest launched its Visa Primary card a few years ago, targeted at precisely the same market Metris wants to enter, but stopped issuing new Primary cards in 1995.

It found card users wanted a mainstream product. A NatWest spokeswoman said it was easy to manage people on a lower income, simply by controlling credit limits.

Mr Zebeck says the plans are at an early stage. But with Britain caught up in a mini-credit boom, the timing of a launch would be auspicious. However, as the late 1980s showed, a credit boom is usually followed by a credit squeeze - as millions of customers discovered when interest rates rose sharply, the economy went into recession, and many were left unable to pay down or service their debts.

Mr Zebeck also has reservations about the quality of credit information available in the UK, saying it is poor compared with the US. Credit vetting is critical for any card issuer. It takes in a range of factors, including income, other debts and household expenditure of the applicant.

Most applications are also referred to one of the main credit agencies who keep a record of details such as county court judgments against the applicant and any other unpaid debts or arrears.

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