With the credit market still in a state of disarray, traditional credit card companies are looking for ways to diversify their sources of funding. Two of the industry’s largest competitors in the card arena, Discover and American Express, have recently begun to offer a portfolio of savings products that compete directly with longtime leaders in this space like ING Direct, and relatively new entrants such as Ally Bank. This is similar to the tactic employed by Capital One nearly 10 years ago as it spawned the Direct Banking division which offers online only accounts with highly competitive rates. What makes this push even more intriguing is the fact that both Discover and American Express are offering rates that exceed competitor products during a time when the overall rate environment has been declining steadily. The below table illustrates the rates for high yield savings accounts at the end of August. Having a high rate, especially in this difficult rate environment, is one way to grab a lot of attention in the marketplace.

While having a best in class rate is all well and good, these two companies realize that getting the word out about their new products is even more important. One of the best ways to do this in the online forum is through utilization of key search terms. In this particular case, non-branded search terms are important since these will be used by prospects without an affinity toward a specific company. Otherwise they would have just gone directly to that company’s website or at the very least conducted a search using a branded term.

As we can see above, both American Express and Discover are capitalizing on one of the most commonly used non-branded terms driving prospects in the savings industry (“online + savings + account”). According to Compete research, this term is actually the 3rd most popular non-branded search term used by prospects going to savings content pages. By bidding on heavily used non-branded terms, these banks are putting themselves in front of a large number of savings prospects that are open to exploring their options at multiple companies. The data below indicates that this strategy is helping both companies increase prospect volume over the past few months, particularly when looking at the traffic for American Express.

Due to the high interest rate and use of sponsored search by both American Express and Discover, each company was able to attract increasing prospect volumes for their savings products in both July and August. Growth in prospect numbers from June to August for both firms has been substantial with Discover Bank increasing prospects by 38% and American Express driving 238% growth during that span.

While both of these companies have a long way to go to match the current online savings leaders in terms of shopper volume (ING Direct attracted over 900,000 online savings prospects in August), having a premium rate and high exposure in search are two key strategies to make headway in the market. As these products increase in popularity, it will be interesting to see if there is a reaction from the banking community and if so, how they respond to the products offered by American Express and Discover.

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