The esteemed over-50 generation has what credit card marketers are after -- stability, strong credit histories, and disposable income.
But have marketers put what these mature consumers want into their card products?
Of the millions of cards issued each year, only a small percentage are geared to older Americans. Yet research shows credit card ownership increases with age, and the average age of cardholders is rising along with the general population.
Among those in the mature market, Bank One Columbus has been out for some time with its cobranded American Association of Retired Persons card. American Express has tried its hand for the past year with its Senior Member card.
A number of regional and community banks offer a credit card tied to other bank products, or a card tied to a club.
Diverse Group
As these issuers have learned, the tricky aspect of marketing any product or service to older Americans is that they are not a cohesive group, despite the fact that marketers tend to cluster Americans by age.
"There's a strange mind-set among older people," noted Stephen Szekely, vice president of credit card research, with PSI in Tampa, Fla. "Some people who are 55 will gladly label themselves senior citizens, others wouldn't admit it. Either way, it's a huge market."
Money to Spend
And a growing one, American Express found in compiling a fact sheet on the mature market. In 1993, 67.1 million people were 50 and older. They are growing five times faster than those under 50, and will reach 82.4 million by 2000.
American Demographics, a monthly publication of Dow Jones & Co., found that in 1991, households most likely to have money to spend were headed by people 45 to 54 years old. On average, that group had $13,612 in disposable income per household and $4,599 per person.
But the magazine found that households with people 55 to 64 have the most disposable income per household member: $5,472. That group had $12,859 to spend per household.
Judith Waldrop, research editor at American Demograhics, says marketers often ignore the spending power of people 50 and older. "For most people in marketing it's business as usual," she said, "which is to ignore them, thinking they are poor with no resources."
Richer than Young Crowd
Interestingly, American Demographics found people 65 to 75 and older had more money to spend than younger groups, including the 46 million people in Generation X, the 18- to 29-year-olds who arguably attract the most marketing attention these days.
"Young people have to buy new things, and older people have all these things," Ms. Waldrop said. "But marketers are going to have to recognize that older people replace those things with better-quality items."
And, of course, they could be charging these purchases on their credit cards, boosting volume for issuers. American Express' fact sheet shows the mature market spends more than $70 billion each year on credit or charge cards, or 20% of the total expenditures on plastic.
With the average cardholder carrying as many as nine different cards, issuers are battling attrition. Recognizing this, American Express Travel Related Services Inc. introduced its senior member program in May 1993.
As an incentive, American Express lowered the annual fee for cardholders over 62 years of age by $20, so that members could pay $35 for the green card and $55 for the gold card.
So far, American Express has been targeting existing customers, many of whom have had the traditional green card for 10 and 20 years, said William T. Moss, a company spokesman. As they move into retirement, he added, cardholders have different needs.
"They don't want to pay a premium price for a product they don't need, but they happen to like American Express very much," Mr. Moss said. "They want to keep the relationship, but they need to be given a reason to keep it."
The senior member program was created to respond to those needs, he said. "Senior Member' appears on the card," he added. "That's very, very appealing. it works on a number of levels. It speaks to the length of tenure. It speaks to the recognition that many in this group feel they've earned and deserve."
Recently, the charge card issuer introduced a marketing package called "Just for You," featuring travel, dining, and shopping benefits for Senior Members. Collectively, American Express' fact sheet says, people over 50 spent nearly $500 million in 1992 on travel, representing 80% of all commercial travel.
Bank One knows a number of its one million AARP Visa cardholders travel, and they like the travel-related discounts they receive because of their club membership.
The Banc One Corp. unit has been issuing the cobranded card since 1990. One unique aspect is that AARP members can qualify based on their net worth, noted Patrick J. Fox, vice president of marketing for AARP Visa at Banc One.
Cardholders can apply for a number of rates, including a fixed 15.6% annual rate, or the prime plus 6.9% variable rate. The classic Visa AARP card carries a $10 annual fee, while a gold card costs $15 a year.
"I think everyone's interested in this group, and it really makes sense because the seniors are prime credit card users," Mr. Fox said.
What's more, the baby boomers are poised to break into the mature market category in 1996, when the oldest boomers turn 50. "This big group has been the squeaky-wheel group," Ms. Waldrop said, clamoring along the way for marketing attention to suit their needs.
Today, 41% of adults, or 76 million, are baby boomers, born between 1946 and 1964. As they age, they will remain a major segment of the population and a a unique marketing challenge for card issuers.
