Banks Pitch Platinum Credit Cards To Rich And Wannabes

The silver-embellished envelopes resemble wedding invitations and the fancy writing inside displays a menu of financial services reserved for only the most “elite,” “successful,” “outstanding,” and “unique” of credit-card users.

That’s you, silly - along with a few million other special people.

Credit card issuers, eager to expand market share, are rolling out the red carpet, mixing hyperbole and snob appeal to get more folks interested in what’s become the hottest new product on the market, the platinum card.

The wealthy, and not-so-wealthy, are being wooed with offers of “special privileges,” like low introductory rates, $100,000 credit lines, round-the-clock customer service and travel perks that attempt to emulate rival American Express Co. At least one issuer will even throw in a box of Godiva chocolates!

While such services may be useful, some industry experts and consumer groups are skeptical. They think platinum’s elite image, promulgated by American Express’ ultra-exclusive card, is being tarnished by mass appeal, and that the marketing hoopla may be more phony than tony.

Some see little difference between the new bank platinum cards, about 5 million of which are currently in circulation, and the old gold cards, nearly 50 million strong.

“Basically, when you strip it all away, it’s a different color card. That’s all,” said Robert McKinley, president of RAM Research Group in Frederick, Md., a credit card research firm.

Stephen Brobeck, executive director of the Consumer Federation of America in Washington, agreed: “Historically, platinum cards offered additional services for a higher annual fee. The cards today that offer no or modest services beyond the gold card, with no additional expense, are simply playing a marketing gimmick.”

Banks defend their strategy as a way to break into the lucrative travel and entertainment segment, long a stronghold of American Express. They argue that they provide important financial services, particularly a chance for consumers to obtain substantial savings on balance transfers.

Most bank platinum cards, many of which waive annual fees, do offer benefits similar to those provided by many gold cards, such as a year-end summary of charges, free extra cards, quick replacement for lost cards, credit-limit increases, travel accident insurance and extended warranty protection.

In fact, McKinley says, the requirements for carrying the brand name Visa or Mastercard on platinum and gold are virtually the same. The only extra requirement is that platinum issuers have 24-hour customer service, he said.

He noted that some issuers have raised travel accident insurance to $1 million from the standard $250,000 offered by the gold card or have expanded credit lines to up to $100,000.

Still, the biggest appeal may be ego, said Robert Heady, publisher of the newsletter Bank Rate Monitor in North Palm Beach, Fla.

“For one brief, shining moment the average guy thinks his credit picture is impeccable because he’s being offered $100,000 (credit line), but he’s more liable to wind up with a credit line for $5,000,” he said.

Critics are especially wary of the high credit limits advertised.

“Less than 1 percent (of card holders) would even qualify for a $100,000 credit limit,” said McKinley.

He said his 18-year-old son recently was solicited by platinum-card issuers. “He kept asking, ‘Dad, am I worthy? Am I worthy?’ And I kept saying, ‘Hell no.”’ The teen applied for a platinum card, but instead received a standard card with a $500 credit limit.

“It’s kind of borderline bait-and-switch,” McKinley said.

American Express sued to prevent the use of the “platinum” name. Last summer, it reached an out-of-court settlement with Visa and member banks, allowing them to use the term for their products as long as the Visa name, or the name of the issuer, appeared prominently on the card. American Express will retain its worldwide trademark on the term “platinum card.”

The American Express Platinum Card has dominated the market for affluent card holders since 1984, charging a $300 annual fee for perks like free concierge service, hotel upgrades and companion tickets on selected airline flights. Members, who are required to have specific spending patterns and income, comprise less than 1 percent of the company’s 40 million customers.

“For a long time, bank card issuers have been trying to create cheap imitations of our products,” said Gail Wasserman, an American Express spokeswoman. “We provide the kind of rich, customized service travelers find in hotels and resorts.”

And that includes looking for a lost raincoat at an airport, arranging a Thanksgiving dinner for an out-of-town relative, even finding someone to cut the lawn.

“One woman was having a party and her gardener hadn’t shown up. We found someone to take care of her lawn.”