Prestige Plastic

A gold rush in credit

Although American Express Co. began issuing gold credit cards to affluent consumers as far back as 1966, the business is now springing to life as one of the hottest and most competitive new forms of financial service. Visa introduced a gold card in April, while MasterCard launched its version last July. The bank credit card firms are convinced that the market for prestige credit extends far beyond the 2 million cardholders who now carry the American Express gold.

The gilded credit cards operate much like regular ones. Consumers can use them to charge a meal, an airline ticket or a new suit. Gold-card holders also receive substantial lines of credit and benefits that include guaranteed hotel and motel reservations, automatic travel insurance and sizable cash advances.

Visa and MasterCard offer their gold cards through banks, which check the credit record of applicants and extend borrowing lines of at least $5,000. Banks market standard MasterCard and Visa cards as well. American Express gold carries a credit line of at least $2,000 and is issued jointly by the firm and participating banks. American Express green, however, is offered directly by the company.

To qualify for regular Visa or MasterCard plastic, a person needs an income of at least $10,000. The standard green American Express plastic calls for an income of about $15,000. The minimum income for the MasterCard prestige card is about $30,000, while Visa's is about $35,000. For an American Express gold card it is approximately $20,000.

The annual fee for the gold cards is substantially more than for the regular ones. American Express charges $50 a year for its gold, compared with $35 for the standard green. MasterCard and Visa prices are set by the banks issuing them. The traditional ones are usually about $15, but the upscale ones are at least $35.

The biggest attraction for many gold carders is not more credit but prestige. Most people rarely use the extra services, although they often say that it is financially comforting to know that they are there in case of emergency. Admits a top executive for a leading New York brokerage firm: "If you want the really honest truth, I have a gold card because of the status. I almost never use the credit line. I really like to have it because it looks neat."

MasterCard and Visa are counting heavily on that type of consumer reaction. Says Fran Schall, a Visa vice president: "This will be a status symbol for many customers. It will be very important to pull it out at a business lunch, especially when colleagues may not have the same card." Adds MasterCard President Russell E. Hogg: "Recognition is one of the greatest marketing tools in America, and the gold card is recognized as prestige."

While American Express was first into the status credit market, Visa and MasterCard believe that the wider use of their cards will help them win customers from American Express. Each of those cards is accepted by some 3.5 million businesses, while only about 500,000 merchants take the American Express one.