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Most gold cards nowadays are free. What does that mean for what was once a prestige product? And how are issuers going to replace lost fee income?
Not so long ago, most Visa and MasterCard gold cards sported annual fees of $25 to $50. The American Express gold card cost a hefty $75. But in order to gain market share, a number of bank card issuers such as Providian Bancorp, First USA Inc., and First Chicago began offering gold cards with no fees. And in 1993, Citicorp, one of the last holdouts for annual fees, eliminated fees on 7.1 million standard and gold card accounts to arrest massive attrition. At the time, analysts estimated Citicorp was saying goodbye to $160 million in yearly revenue.
Now the move to free gold is essentially complete. A late-1995 study by Behavioral Analysis Inc., a Tarrytown, N.Y.-based firm that tracks credit card solicitations, revealed that virtually all of the gold card offers it analyzed carried no fee. The few remaining gold cards with fees are mostly premium versions of cobranded cards. AmEx's gold charge card retains its fee, but a new American Express Optima gold card is free.
Down the drain with the fees is the perception that gold is something special, at least in some observers' eyes. "The prestige factor is gone," says Collin G. McKenny, senior vice president of Cincinnatibased Star Banc Corp. "Gold cards are no longer as big a deal as they were in the mid-'80s."
And as gold becomes cheaper, it us also becoming more common. Independent studies by Behavioral Analysis and Credit Card Management's sister publication, Credit Card News, show that about half of all bank card solicitations nowadays are for gold cards. In its second-quarter 1995 mail survey, BAI said that 48o/o of the estimated 332.4 million general-purpose card solicitations were for gold cards.
The Credit Card News survey, which tracked mailings received by staff members of the newsletter's publisher, Faulkner & Gray Inc., between April 1994 and November 1995, said 52% of general-purpose offers were for gold.
Gold Everywhere
With solicitations weighted toward gold, the gold card not surprising- ly is accounting for an increasing share of the card associations' bases. MasterCard International had 38.3 million gold cards in...