Credit cards for wealthy consumers become even more rewarding
Reward credit cards are becoming even more rewarding, as card issuers hope to get wealthy shoppers to charge more of their holiday purchases.
American Express announced an expanded rewards program on Nov. 14, 2006. The program will offer Platinum and Centurion cardholders the opportunity to earn such high-end items as a $260,000 Lamborghini Gallardo Spyder convertible with 10.5 million points and an over $900,000 Chopard 53.2-carat, diamond-encrusted watch with 93.2 million points. Other rewards include gift certificates from Tiffany & Co..
According to American Express, with credit card users already able to redeem rewards for spacewalks and other unique experiences, the latest program simply brings rewards to the next level.
The goal is for enhanced rewards to spur holiday credit card spending, at a time when competition for wealthy consumers is increasing and American Express (which introduced the Platinum credit card two decades ago) is facing challenges to its control of the market.
Experts note that credit card issuers are all struggling to draw wealthy consumers with better and better rewards programs. While each issuer defines the affluent segment differently, such households earn a minimum of $100,000 each year.
Since affluent cardholders do not tend to revolve a credit card balance, issuers do not earn monthly finance charges from them. However, merchants benefit from their sizable spending in the form of payments from merchants for every credit card transaction. And, rewards spur consumers to whip out their plastic, as well as another reason to hold onto their credit cards. American Express says customers enrolled in rewards programs often keep their credit cards three times longer than consumers who are not enrolled.
Recent years have seen Visa and MasterCard issuers aggressively woo affluent consumers with their Signature and World credit cards, providing rewards that include theater tickets and Super Bowl parties. In September, MasterCard introduced a World Elite credit card that yields added perks like free companion airline tickets, concierge service and entry to special events.
Obviously, wealthy consumers can afford many of these luxuries on their own. As MasterCard explains, these rewards offer opportunities to experience things in a way in which few others are able.
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