Underscoring upscale consumers’ continuing appeal to credit card issuers, American Express Co. and Mercedes-Benz USA have joined forces to offer a cobranded card with rewards tied to the luxury car brand’s products, the companies announced Aug. 22.
Mercedes-Benz Credit Card from American Express and the Platinum Card from American Express Exclusively for Mercedes-Benz sport annual fees of $95 and $475 respectively.
The lower-cost card’s fee parallels those of new cobranded travel cards from rivals including JPMorgan Chase and the higher-cost card is $25 higher than Amex’s basic Platinum card, analysts note.
The products’ annual fees also stand out from certain rival luxury-car makers’ cobranded cards.
BMW of North America and Lexus USA each offer a cobranded Visa card through their own banks that carry no annual fee and provide rewards usable toward buying and leasing new vehicles and related merchandise.
“The fact that Amex is charging an annual fee suggests they are going after affluent customers and those of high net worth, and it makes a lot of sense because Amex can fairly easily apply its infrastructure already in place for its cobranded travel cards to this product,” Brian Riley, senior research director with TowerGroup, tells PaymentsSource.
Bank of America Corp. previously issued a Mercedes-branded Visa credit card program that it discontinued last year, a BofA spokesperson confirms.
With its cobranded Mercedes card, Amex dangles the opportunity for Mercedes car owners and enthusiasts to earn rewards points at a higher rate on certain types of purchases.
Cardholders opting for the basic Mercedes Amex card may earn five points per $1 spent at Mercedes dealerships, three points per $1 spent on gasoline, two points per $1 spent at restaurants and one point per 1 spent on all other purchases. Other rewards include a $500 certificate toward a new vehicle, 1,000 excess miles waived at the end of a car lease and a $50 annual reward certificate for Mercedes car accessories.
Platinum Mercedes Amex cardholders receive five points per $1 spent at Mercedes dealerships and one point per $1 on all other purchases; access to airport lounges and concierge service at certain hotels; a $200 airline credit; $1,000 toward a new vehicle; 2,000 miles waived at lease-end and a $100 annual certificate for Mercedes accessories.
By contrast, BMW Bank of North America in 2000 introduced a cobranded Visa card enabling cardholders to earn points redeemable for up to $5,000 toward leasing or buying a new vehicle, the opportunity to redeem points for BMW service and merchandise, and a $100 certificate toward a new lease or loan. Cardholders earn one point for every $2 spent and double points on gas purchases.
BMW also offers a Performance Plus rewards program for $50 a year, enabling cardholders to earn one point per every $1 spent redeemable toward air travel, hotel stays, and merchandise at most U.S. department and specialty stores and certificates as spas across the U.S.
And Lexus USA in 2005 introduced its Pursuits cobranded Visa Card, enabling cardholders to earn points redeemable toward 10% off their next new Lexus. The card, issued by Lexus Financial Savings Bank, enables cardholders to earn five points per $1 spent at participating Lexus dealerships and 1.5 points $1 spent elsewhere.
Amex’s cobranded Mercedes card likely will target a “narrower” group of potential customers than the no-annual-fee cards tied to other luxury car brands. In exchange, its rewards will be “a bit richer,” Scott Strumello, an associate with Auriemma Consulting Group, tells PaymentsSource.
“The only drawback here is the fact that while cobranded cards targeting upscale customers are a pretty hot segment, Amex is going after a group that is already being pursued by a lot of other issuers,” he says. “By now every luxury car owner probably has a lot of other options for similar cards, and winning them away is not a given.”
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