Domestic

Card Issuers Wage a 'WorldPerks War' for Your Business

When Delta Airlines acquired Northwest, SkyMiles credit card issuer American Express anticipated adding millions of WorldPerks members. But WorldPerks issuer U.S. Bank had other ideas. Here's how their battle affects you.

The big news in the airline business the last few months has been the Delta/Northwest merger, creating the world's largest airline.

But while those two former competitors found a path to peace, a hot little battle has been going on between their allies ... rival credit-card mileage programs affiliated with each of the carriers. The programs are the WorldPerks Visa card, issued by U.S. Bank, and the Delta SkyMiles card, owned by American Express. The prize both are after ... millions of WorldPerks card users who, each month, generate mega-amounts of interest and fees to the card issuers.

When Delta took over Northwest, Amex likely thought one of the spoils of the merger would be those cardholders, who, since the WorldPerks brand would disappear along with Northwest, would have to re-up with SkyMiles. And indeed Delta began to issue guidelines to transfer miles from one to the other.

There was, however, one thing Amex perhaps didn't fully consider ... the reaction of U.S. Bank.

In a marketing coup described by one expert as "brilliant," the former WorldPerks sponsor announced a new Visa card called FlexPerks, which not only accumulated miles usable on Northwest/Delta, but on any of 150 different airlines worldwide. All WorldPerks Visa cardholders automatically got FlexPerks cards.

A High Stakes Game

With the battle lines drawn, the two financial giants began to outbid each other in a high stakes game to attract customers. When SkyMiles waived its $95 annual fee for the first year, FlexPerks matched the free year and raised the ante with an ongoing $49 fee. Where SkyMiles offered 25,000 free miles for a signup, FlexPerks hit back with a $20 credit per trip to reimburse checked bag or in-flight service fees, plus double miles on some purchases.

In the end, the battle wound up in court, with Northwest suing its former partner for everything up to and including stealing their program name, well, the "perks" part, anyway. But as in so many business suits, the litigants ended up with a deal on "mutually agreeable terms," according to Teri Charest of U.S. Bank. Here are the details:

--U.S. Bank will continue to issue its FlexPerks Visa, but instead of generating miles, purchases will receive "FlexPoints" — one point per dollar spent, with double points on some purchases, including gas, groceries, and of most interest here, air travel.

--Each cardholder will get a date at which FlexPoints start to be earned. For 30 days after that date, the card will generate WorldPerks miles along with the points. But then WorldPerks miles will be cut off, and the customer's previous WorldPerks Visa card will no longer work at all.

--FlexPoints, however, will continue be usable for air travel. On the basic plan, 20,000 miles convert to a ticket worth $400, with higher point totals leading to higher value tickets.

Which Card Should WorldPerks Members Choose?

While the truce in the "WorldPerks War" may settle things among the card issuers, it settles nothing for you if you're a WorldPerks member. Each current cardholder must now make the decision on which card to use in the future.