How does a small bank rate a WSJ-bylined story when it ups its credit card reward percentage by 15 basis points? Sure, it helps to be headquartered in NYC, home to much of the country's financial media. But you also need a compelling story line.

What could be better than a small player eating the big guys' lunch? Layer in the online-only factor, a strategy that had been declared dead by many analysts after botched attempts by Bank One (Wingspan Bank), Citibank (eciti), and Benchmark Capital (Juniper Bank). Finally, top it all off with a 150-year old company all of a sudden making like a Bay-area startup, and you have a story with real legs.

EmigrantDirect, the direct-banking unit of Emigrant Savings Bank, once again landed in the media (WSJ Mar. 28), with a relatively small change to its credit card launched earlier this year. It's the second time this month, and sixth this year, that the bank has been mentioned in personal finance articles in The Wall Street Journal.

This time the story highlighted EmigrantDirect's credit card, touted on its website as America's Highest Cash Back Card, that now pays a cash rebate of 1.4% on all retail purchases, up from 1.25% earlier (see note 1). The fine print on the claim says that other cards may pay a higher percentage, but they require minimum purchase levels before the higher rebate kicks in (see note 2).

Analysis
Since the launch of EmigrantDirect a little over a year ago, the bank has raked in $6 billion in deposits and 225,000 accounts for an average balance of about $27,000. The direct-banking unit's success essentially doubled the deposit base of the bank in a single year, halting a gradual decline in total deposits over the previous decade.

It will be interesting to see how Emigrant reacts as more banks enter the market such as Washington Mutual (NetBanker Nov. 18, 2005) and Puerto Rico-based Popular that is planning to go after U.S. deposits under its own name and that of its well-established E-Loan brand. For more information, refer to last fall's report, Lessons from the High-Rate Marketers (OBR 120/121).

--JB

Notes:
1. Interestingly, the higher rebate is retroactive to Jan. 2006, an unusual bit of financial services generosity.
2. Another bit of crucial fine print: The EmigrantDirect card requires a $10,000 average deposit balance FOR THE PAST SIX MONTHS in order to earn the rebate.