Post by fastwalker on Sept 22, 2004 0:30:05 GMT -5
;DFYI..INFORMATIONAL ONLY..But wouldn't this be nice with CMKX written all over it...
Credit Cards That Scream "I'm Rich!"
Led by the Amex Centurion black card, this growing breed of plastic packs more perks and panache than ever for the consuming elite
Remember when a good reward for using a credit card was a set of pens or a free transistor radio? Not anymore. Spend enough on your card -- if it's the right one -- these days and you can earn free perks like private jet travel, a massage at a high-end spa, or a personal concierge to find you the perfect romantic spot in Venice from which to propose marriage. Advertisement
Those are some of the latest rewards available to holders of the free Merrill+ Visa card who spend at least $50,000 a year, says Peter Barsoom, head of the credit-card business at Merrill Lynch (MER ). From the company's standpoint, the strategy is simple: "The more benefits, the more loyalty," he explains.
Even plusher in the fancy-perks realm: Stratus Rewards debuted Apr. 12 with a Visa card issued by U.S. Bank. It allows members to redeem points at Christie's auctions and Abercrombie & Kent safaris, among other places. Scoffing at standard rebate programs for free air travel or catalog shopping, Stratus President Alison Chittum boasts: "It's time to kiss the mundane, the pedestrian, and the unromantic goodbye."
"KEY FEATURES." Stratus, which charges $1,500 a year for its card, is going after the elite market American Express (AXP ) created with its high-end Centurian card in 1999. Sporting an eye-popping $2,500 annual fee, the cultish "black card" is still the ultimate in plastic panache, delivering free valuable upgrades on air travel and hotel stays.
Indeed, dozens of credit-card companies are now competing to come up with the ritziest rewards that will attract the spendiest customers to their cards. It's a smart strategy for the fiercely competitive industry now that interest rates are rising, which removes the allure of low-rate pitches, says Michelle Grabow, a credit-card analyst with Informa Research Services in Calabasas, Calif. "Right now benefits are going to be the key features that a lot of credit-card companies are going to focus on," she says.
Focusing on the rich is also a good strategy as broader consumer spending wobbles and the wealthy retain most of their spending power (see BW Online, 9/3/04, "Shoppers: Moneyed vs. Worried"). Affluent customers, with incomes above $125,000 a year, spend about two-and-a-half times the average cardholder, says Scott Valentin, an analyst with Friedman, Billings, Ramsey & Co. who covers American Express and MBNA (KRB ). But he warns that the pricier perks may ultimately eat into the profit margins of the card companies.
BEYOND COACH. Some companies are recouping at least part of the expense of costly rewards -- and maintaining ultra-exclusivity -- by charging what may seem preposterous amounts in annual fees. AmEx claims demand is high for its Centurian card despite its $2,500 annual fee (raised from $1,000 two years ago). But only current AmEx cardholders who spend at least $150,000 a year and have excellent credit ratings are offered one, says spokeswoman Desiree Fish.
What could possibly be worth that kind of annual charge? It's the free upgrades to first-class airline seats or premium hotel suites that hook users. Jeff Klein, who splits his time between New York, where he owns the City Club Hotel, and Los Angeles where he's opening the Argyle Hotel, says the Amex black card paid for itself the first time he enjoyed a first-class cross-country airline seat worth $4,000 for the price of a $700 coach fare. "I'm too big of a guy and work too hard to be in a center coach seat," says Klein.
For Klein at least, Centurian's status offers little extra attraction. But other customers say they enjoy oohs and ahs (and perhaps a free bottle of wine) when they whip it out at restaurants. The card also offers flashier benefits like $100 toward fur restyling at Neiman Marcus, VIP dressing rooms at fashion house Escada, and after-hours shopping appointments at Bergdorf Goodman. As far as perks go, "Nothing is going to compare to Amex," says Informa's Grabow.
"VALUE CONSCIOUS." For now, competitors are vying most heatedly for the so-called mass affluent customers, those who are doing well, spend freely, but haven't made it to the Centurian level. These folks don't insist on flying first class and aren't willing to pay a fee.
In May, Bank One started offering the no-fee Audi Visa Signature Card, which earns points toward car payments or other rewards. On Sept. 14, Citibank (C ) introduced the CitiPremierPass MasterCard, which offers points on goods purchased (including airline tickets) as well as miles flown. At the "elite" level, customers get free unlimited companion travel.
Merrill Lynch's Barsoom says Merrill found that even its richest customers wanted a card with no annual fee and a low interest rate along with a high credit limit and lots of rewards. "Our clients, while wealthy, are still very value conscious," says Barsoom. Chances are that's how at least some them got to be ultra-rich in the first place.
Credit Cards That Scream "I'm Rich!"
Led by the Amex Centurion black card, this growing breed of plastic packs more perks and panache than ever for the consuming elite
Remember when a good reward for using a credit card was a set of pens or a free transistor radio? Not anymore. Spend enough on your card -- if it's the right one -- these days and you can earn free perks like private jet travel, a massage at a high-end spa, or a personal concierge to find you the perfect romantic spot in Venice from which to propose marriage. Advertisement
Those are some of the latest rewards available to holders of the free Merrill+ Visa card who spend at least $50,000 a year, says Peter Barsoom, head of the credit-card business at Merrill Lynch (MER ). From the company's standpoint, the strategy is simple: "The more benefits, the more loyalty," he explains.
Even plusher in the fancy-perks realm: Stratus Rewards debuted Apr. 12 with a Visa card issued by U.S. Bank. It allows members to redeem points at Christie's auctions and Abercrombie & Kent safaris, among other places. Scoffing at standard rebate programs for free air travel or catalog shopping, Stratus President Alison Chittum boasts: "It's time to kiss the mundane, the pedestrian, and the unromantic goodbye."
"KEY FEATURES." Stratus, which charges $1,500 a year for its card, is going after the elite market American Express (AXP ) created with its high-end Centurian card in 1999. Sporting an eye-popping $2,500 annual fee, the cultish "black card" is still the ultimate in plastic panache, delivering free valuable upgrades on air travel and hotel stays.
Indeed, dozens of credit-card companies are now competing to come up with the ritziest rewards that will attract the spendiest customers to their cards. It's a smart strategy for the fiercely competitive industry now that interest rates are rising, which removes the allure of low-rate pitches, says Michelle Grabow, a credit-card analyst with Informa Research Services in Calabasas, Calif. "Right now benefits are going to be the key features that a lot of credit-card companies are going to focus on," she says.
Focusing on the rich is also a good strategy as broader consumer spending wobbles and the wealthy retain most of their spending power (see BW Online, 9/3/04, "Shoppers: Moneyed vs. Worried"). Affluent customers, with incomes above $125,000 a year, spend about two-and-a-half times the average cardholder, says Scott Valentin, an analyst with Friedman, Billings, Ramsey & Co. who covers American Express and MBNA (KRB ). But he warns that the pricier perks may ultimately eat into the profit margins of the card companies.
BEYOND COACH. Some companies are recouping at least part of the expense of costly rewards -- and maintaining ultra-exclusivity -- by charging what may seem preposterous amounts in annual fees. AmEx claims demand is high for its Centurian card despite its $2,500 annual fee (raised from $1,000 two years ago). But only current AmEx cardholders who spend at least $150,000 a year and have excellent credit ratings are offered one, says spokeswoman Desiree Fish.
What could possibly be worth that kind of annual charge? It's the free upgrades to first-class airline seats or premium hotel suites that hook users. Jeff Klein, who splits his time between New York, where he owns the City Club Hotel, and Los Angeles where he's opening the Argyle Hotel, says the Amex black card paid for itself the first time he enjoyed a first-class cross-country airline seat worth $4,000 for the price of a $700 coach fare. "I'm too big of a guy and work too hard to be in a center coach seat," says Klein.
For Klein at least, Centurian's status offers little extra attraction. But other customers say they enjoy oohs and ahs (and perhaps a free bottle of wine) when they whip it out at restaurants. The card also offers flashier benefits like $100 toward fur restyling at Neiman Marcus, VIP dressing rooms at fashion house Escada, and after-hours shopping appointments at Bergdorf Goodman. As far as perks go, "Nothing is going to compare to Amex," says Informa's Grabow.
"VALUE CONSCIOUS." For now, competitors are vying most heatedly for the so-called mass affluent customers, those who are doing well, spend freely, but haven't made it to the Centurian level. These folks don't insist on flying first class and aren't willing to pay a fee.
In May, Bank One started offering the no-fee Audi Visa Signature Card, which earns points toward car payments or other rewards. On Sept. 14, Citibank (C ) introduced the CitiPremierPass MasterCard, which offers points on goods purchased (including airline tickets) as well as miles flown. At the "elite" level, customers get free unlimited companion travel.
Merrill Lynch's Barsoom says Merrill found that even its richest customers wanted a card with no annual fee and a low interest rate along with a high credit limit and lots of rewards. "Our clients, while wealthy, are still very value conscious," says Barsoom. Chances are that's how at least some them got to be ultra-rich in the first place.
