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Nordstrom Inc. has become the first major retailer to issue a Visa credit card that would compete with its own store card.

The upscale department store, in the middle of aggressive national expansion plans, is the first to employ the concept called co-branding, which is designed to build customer loyalty and capitalize on a well-respected name by offering an incentive to use the card.Customers who spend $1,000 a year with the Nordstrom Visa would get 1 percent off Nordstrom purchases for that year. Consumers could get a maximum 5 percent off store purchases after spending $5,000 on the card.

Robert B. McKinley, president of Ram Research Corp. in Frederick, Md., said the average consumer charges about $2,500 a year "so someone could be getting a fairly decent return for not much effort."

Automakers, oil companies and airlines have dominated the co-branding field thus far. Other department stores, including J.C. Penney, Spiegel Inc. and Circuit City, market credit cards under bank names that do not compete directly with their own store cards.

Bruce Nordstrom, a company director, said the card will give an incentive to shoppers who have been reluctant to make purchases using department store credit cards, which generally have a higher interest rate.

"There's no question that the percentage of sales have flattened with the use of our card. Thus we figured if we can't lick 'em, we'll join them," he said at the company's annual meeting in the Chicago suburb of Oak Brook.

The average department store interest rate stands at about 20 percent, while some banks offer rates as low as 8.9 percent.

The Nordstrom Visa has a $30 annual fee and a 14.9 percent interest rate, which will rise to 8.9 percent plus the prime lending rate in 1995. The prime rose one-half point Tuesday to 7.25 percent.

"The appeal of this is that people can use this card for general purchases and not have to carry an extra store card," said David Robertson, president of The Nilson Report industry newsletter in Oxnard, Calif.