Credit card companies are reevaluating their gold card strategies in a drive to retain some of their best customers.
Card issuers are finding that some creditworthy, upscale consumers are willing to pay higher
fees in exchange for more perks and services.
Citicorp and American Express Co., for example, have been testing consumers' appetites for gold cards with hefty fees.
Citibank has rolled out a new product, called Citibank Gold Advantage Card, which is linked to its frequent-flier program with American Airlines.
A test, begun in November 1993, persuaded Citibank that a segment of its Advantage miles customers would qualify for and be interested in a gold card product that offered more services and opportunities to earn frequent-flier points.
The Citibank-American Airlines partnership, launched in 1987, has yielded more than one million customers.
A select group of those customers are being solicited first for the new gold card, though spokeswoman Maria Mendler said the "next step" for Citibank is "sending out a gold card to noncustomers."
The Citibank Advantage Gold Card charges an $85 annual fee, versus the standard Advantage miles program, which costs $50.
Unlike the standard miles program, the gold program offers protection against fire, theft, or damage up to 90 days from the date of purchase; extended manufacturers' warranty; a free initial companion airline ticket, as well as an additional annual ticket when customers fly at least 15,000 miles; and a free annual summary of gold card purchases.
Gold card customers can also earn more miles in one year 100,000 miles versus the standard 60,000 -- and they earn double miles at participating partners.
Skimming off the best cardholders from a portfolio is "probably a natural milestone within a specific program," said Lisa Nash, vice president of Visa Gold International.
"Gold cards have been positioned in the past as an upscale product," added Ms. Nash, "but now it is seen as a way to reward customers who spend a lot."
The San Francisco-based association reports that its gold card business, in terms of outstanding balances and new accounts, has steadily grown by about 40% annually.
MasterCard International, for its part, is planning to commit more marketing muscle to its gold card program. The New York-based association said that 60% of its advertising next year will be devoted to gold cards.
Banks that upgrade existing customers to gold cards typically target long-term relationships with higher credit limits, according to Visa, and many of these customers already have balances approaching the credit limit. Citibank is an example of this. Ms. Mendler said the bank is offering the Advantage gold card to customers who already have a minimum credit limit of $5,000, which is generally the lowest gold card credit limit.
American Express also identified a group of its customers that would not find a $125 annual fee offensive.
The financial services company launched a new charge card product in October called Rewards Plus Gold Card, which offers customers all the perks of a gold card in addition to some new features like a service that tracks customers' frequent-flier points with all such programs.
Frank Skillern, president of American Express' U.S. consumer card group, said Rewards Plus is designed to stem some of the attrition in the company's standard gold card program, which costs $75 a year.
