Citibank and Virgin Money to launch the new Virgin Credit Card
The partnership between Citibank and Virgin Money will foster a new banking model with an online structure. This model offers low deposit rates that are truly market-leading and the project is heading towards a retail banking structure that offers full services including mortgage products.
Virgin reaches its market
Australians are more than ready for a better choice of low fee credit cards. During the past year there was a 5% increase in card receivables mainly due to low -fee card demand. Virgin Money is targeting this market share in an attempt to grab a new customer base that is ready for a change.
Virgin has been branded with a younger person type of appeal and its demographic range includes people that are between 25 and 44 years of age. It is a fitting match since Virgin is a relatively new company with the youngest section, Virgin blue, only around for the last 10 years. Virgin Atlantic has been around 25 years and the Virgin group has been around for 40.
This launch is family oriented since David Baxby is the representative for Branson on the boards of his various airline assets, such as Virgin Australia, and the head of Virgin Money is his brother Matt. Both of these individuals were working on the Australian float for Virgin Australia about 10 years before they joined up in London with the Virgin group.
No Annual Fee Credit Card
With the Virgin Money No Annual Fee Credit Card you can now earn free Velocity points for taking it to the shops. Plus you get to enjoy one of the lowest balance transfer rates in the country for the first 18 months. Best of all, you never have to pay an annual card fee. Free access to exclusive Virgin Family offers and discounts.
- $0 p.a. annual fee
- 18.99% p.a. on purchases
- 0% p.a. for 18 months with 2% balance transfer fee on balance transfers
- Cash Advance Rate of 20.99% p.a.
- Up to 44 days interest free
- Minimum Income Requirement of $25,000 p.a.
Even though it is a relatively new company, Virgin has been a part of the Australian financial scene for quite a while, and this partnership with Citibank may help Citibank raise its Australian retail growth.
The last joint venture Virgin Money took part in was with Westpac. They each went their separate ways after some issues arose over problems with processing and credit controls. Virgin Money was issuing too many cards and Westpac had a hard time keeping up with the influx of orders.
Virgin also partnered up with Macquarie but that too ended with problems when capital costs went soaring and the mortgage operations at Macquarie had to close. This was during the recent financial crisis, and since that time Macquarie and Virgin have regrouped to form a joint venture that is more sensibly based with Citigroup.
This time around, both participants are sharing the split on a 50-50 basis so that the rewards are equal and any past problems are not relived.
It will be interesting, to say the least, to find out what the future brings for this new banking model. The branding power of Virgin, along with the financial resources and banking license of the Citigroup, may end up to be a major contending force to be reckoned with in the Australian financial market.