COVER STORY
Platinum is the new gold in the prestige credit card market, Ed Charles reports
ONCE upon a time it was a class act to have a gold credit card. Then in 1997 along came the American Express Platinum charge card. It was invitation-only and more exclusive.
Although the prestige was diluted when other players entered the market, led by Citibank in 1999 and the high-street banks three years ago, people still can’t resist the lure of platinum.
“Platinum is the next big growth area in consumer cards,” HSBC cards head Rod Hyde says. “With the entry of ANZ into the platinum card market last year, all but NAB have a platinum credit card product.”
The financial criteria for these cards, which have minimum limits of $12,000, are dictated by Mastercard and Visa.
This month, the salary criteria for applying dropped from $75,000 to $65,000 salary. That was first noted on Westpac’s site for the Altitude package for American Express and Mastercard.
These are not hard and fast rules, Hyde says. They are there simply to avoid tyre kickers (time wasters). Citibank, which introduced its card in 1999, says it is only interested in people who earn more than $70,000.
“It really does depend on the income and the customer’s debt servicing ability,” Citibank cards head Roy Gori says.
Thus even platinum’s prestige is being eroded. The blame for this can be laid at the feet of Commonwealth Bank.
It claims it changed the market three years ago when it launched its own version of platinum with the tagline Platinum for the People.
“Until then a lot of it had been invitation-only with very high salary limits. We actually made it available to a much bigger part of the population,” consumer finance general manager Scott Hendricks says.
Those with status in mind shouldn’t concern themselves. In 2004 came the Australian variation of the American Express Centurion, the next level up from platinum. Invitation-only, exclusive and black, it costs $4300 a year to hold.
A few weeks ago in Australia the Centurion was upgraded from plastic to a metal alloy, weighing three times more than a regular card.
Perhaps this is a move to pre-empt the inevitable launch of more black plastic cards in the Australian market, something that has already happened abroad, where Mastercard alone has titanium, diamond and black cards.
According to industry estimates, there are three million gold card holders in Australia and about 300,000 Platinum holders. American Express, presumably to maintain its mystique, doesn’t reveal how many Centurion members there are in total.
The banks say people want special benefits that are no longer available on the gold cards.
“They don’t want a silver cover on a catalogue or what basically is a rewrapped gold card,” Gori says.
“They want something that has substantial value, and real value that is personalised to meet their needs.”
All these cards offer special benefits, including enhanced rewards points, travel and various insurance options and extended warranties.
They offer preferential ticketing and restaurant booking services and some even offer concierges and personal shopping services.
As with most things, the more you pay, the more you get.
The American Express Centurion costs $4300 a year and comes with Qantas Club membership. If you are already a member it can be transferred to a partner.
First and business class customers are offered complimentary limousines and bag carriers to meet them at airports.
Companion airfares are offered together with everything you would expect from a Platinum card and a bit more.
* Rewards PointsCommonwealth Bank’s Scott Hendricks says points are the most popular benefit for platinum customers.
Among the points schemes, the most popular are those that can be redeemed against anything, rather than a fixed catalogue or a single airline such as Qantas.
Personalised rewards are more popular because they enable customers to redeem rewards for whatever they choose.
“We’ve had people use it for outdoor lounge settings, car tyres, plants for a garden,” Citibank’s Gori says. “We’ve even had people use it to pay school fees or to buy a Harley-Davidson motorbike.”
Each point plan comes with its own bells and whistles but most offer better rewards than gold or standard cards.
“If you look at a lot of platinum rewards programs in Australia, they have not been diluted to the extent that the other rewards programs have. A lot of people have upgraded to platinum to maintain one-for-oneness, rather than $2 equals one point,” Hyde says. According to a rating of card rewards schemes by Cannex, the top platinum card for rewards is the $295 a year Westpac Altitude Platinum rewards American Express Card.
The Westpac card issues three points for every dollar spent. Altitude points never expire and there is no limit to how many points can accumulate.
The next highest rated by Cannex were the Citibank and Commonwealth Bank platinum cards.
Commonwealth Bank boasts four points for every dollar spent, but has a limit of $150,000 collected in any one year. With ANZ, there are no limits on how many bonus partner points can be earned in a month, but one point is earned for every $1 spent up to $2500 then one point for every $2 up to $10,000.
The American Express Platinum Credit card earns 1.5 points for the first $100,000 spent and thereafter earns one point per dollar spent. Amex’s platinum credit card does not offer a concierge service. For that you need the invitation-only charge card.
* Travel insuranceAll platinum credit cards offer complimentary travel insurance, again with differing terms and conditions.
The ANZ Frequent Flyer Visa Platinum, has one of the best travel policies, and is based on CGU’s top cover.
ANZ has a vehicle hire excess waiver of up to $2000. Westpac covers the cost of any excess up to $5000 as long as comprehensive insurance cover is taken out with the rental car company.
Citibank has a similar policy and will pay any rental vehicle excess without a limit.
Westpac’s Stephen Karpin says a key irritant for customers is the extra premium that must be paid to avoid accident excess when travelling. “That can be $US20 ($25.70c) a day on a normal car rental.”
Many cards, such as the St George platinum, now offer domestic travel inconvenience cover for food, drink and accommodation on substantial delays.
* Free flightsEach card throws other benefits into the pot. The $395 American Express Platinum Credit Card offers a return Qantas flight to anywhere in Australia each year.
Commonwealth Bank, with its $200 a year card, goes one better with an attractive companion airfare deal. The website offers savings for customers buying two business-class or first-class tickets with specific airlines including Japan Airlines, Air Tahiti Nui, Air Pacific or Asiana Airlines. Commonwealth’s Hendricks says the offer boils down to getting a free ticket when two business or first-class flights are purchased.
* Other benefitsExtended warranties and purchase protection insurance are now standard on platinum cards. Typically for anything bought on a card, if the item is lost, stolen or damaged within a certain number of months of purchase it will be repaired, replaced, rebuilt or reinstated, free of charge.
Purchase protection cover will extend warranties on goods from 12 months up to 24 months, but as with everything, terms and conditions apply.