U.S. Bank is adding some luxury luster to its credit card lineup.
The nation's fifth-largest bank said Monday it agreed with BMW Financial Services to issue credit cards that provide rewards for BMW products and services.
U.S. Bank also acquired an existing credit card portfolio from BMW Bank of North America, which provides loans and other financing to buyers of BMW vehicles.
That portfolio generated about $10 million in income for BMW Bank during the first three months of the year, the latest period for which data are available. That would make it a relatively small addition to U.S. Bank's credit card business, which generated $365 million in income during its latest quarter.
The transaction comes after BMW nearly a year ago began looking for buyers for its credit card business. The company was one of the last automakers to still be in the card business. Other manufacturers and retailers have shed their credit card units in recent years to banks that can more affordably maintain the reporting and other regulatory requirements to run them.
"We are thrilled to have the opportunity to serve customers of BMW, a brand and company that is recognized and respected around the world," John Steward, president of U.S. Bank's retail payment unit, said in a statement.
The changeover for existing users of BMW credit cards will happen early next year.
U.S. Bank said its new BMW-affiliated card "will provide an enhanced experience with richer rewards where customers can earn and redeem points toward BMW products and services."
U.S. Bank will offer new customers of the card a one-click application process that could be triggered inside a BMW dealership to assist with a car down payment.
The Minneapolis-based bank already provides affiliated card services for outdoor retailer REI and Quicken, a provider of financial record-keeping services. It also operates cards for 10 regional retail and gas station operators, including Fry's Electronics and the Harris Teeter grocery chain.