Citi is the latest credit card issuer to launch a new card which caters exclusively to wealthier consumers, especially those who travel around a lot either for business or leisure.
This past Monday, the company unveiled their brand new Citi Executive/AAdvantage World elite MasterCard in partnership with AMR Corp., the parent company of American Airlines. The co-branded credit card will offer a range of elite travel benefits including Admirals Club membership benefits, no foreign transaction fees, waived baggage fees of domestic flights, concierge services and an “enhanced airport experience.”
Plans were also revealed to add the EMV-enabled chip to the cards later this year. EMV (Europay, MasterCard, and Visa) chips are commonly used across Europe. The cards use a microchip and a personal identification number (PIN) to authorize a credit card instead of a signature. Often this can mean using an American card is difficult in some areas of Europe. The decision to add the EMV chip to the new Citi Executive/AAdvantage World Elite MasterCard will allow elite customers to use their card worldwide with little to no fuss. This is especially useful to consumers who do a large amount of worldwide traveling.
Citi is by no means the first, or the only, issuer to target more affluent customers with new products. Chase unveiled their own premium credit card last month. The Chase Ritz-Carlton reward card is aimed at more affluent consumers with an annual fee of $395. These new premium cards are in direct competition with the American Express Platinum card. American Express have long held the majority of the premium card market and Amex branded cards are actually seen as somewhat of a status symbol thanks to their reputation for dealing with only the most affluent customers.
In June, American Express had the lowest delinquency rate in the country, which reflects the class of their clientele. It is interesting to note that the head of Citi’s credit card business in North America is actually the former head of American Express’ consumer services which may account for the renewed interest the card issuer seems to have in the premium market.
Ken Paterson, vice president of research operations at the Mercator Advisory Group, believes that after the battering many credit card issuers took during the recession, the majority of them are playing it safe by targeting low risk consumers with high credit scores and healthy spending habits. This also accounts for the recent trend in the enhancement or re-branding of travel credit cards in an attempt to attract the more affluent consumer.