The Credit Card Battle

Have you checked your mailbox lately? There’s a good chance you’ll find a credit card solicitation waiting for you.

And the card simply won’t let you buy things. That would be too pedestrian, too plebeian.

When it comes to travel and credit cards, the world has changed dramatically.

Some credit cards now offer life insurance or baggage-loss insurance. Others insure rental cars. Still others provide emergency medical assistance and even will evacuate ill card holders from foreign lands.

And there’s more. Some credit cards accrue mileage points in airline frequent-flier programs, rebate percentages of travel costs, and allow holders to join private clubs and receive invitations to special parties. American Express even doubles manufacturer guarantees when certain products are bought with the card.

More Than Ever

In the last six weeks I received offers from credit card companies that claim, if I sign up for their card, they will do everything but marry me.

During the last two years more solicitations for new credit cards have been mailed out than ever before.

In 1982 there were 15 million American Express card holders. Last year that number had almost doubled to 27 million. During the same time, MasterCard zoomed from 54 million to more than 86 million card holders and Visa jumped from 76 million to about 120 million.

“It’s definitely a war out there,” Keith Kendrick, vice president of consumer card products for MasterCard International, said.

Edwin Cooperman, president of the American Express consumer card group, agrees: “We’ve gone way beyond the concept of the credit card just being used to charge purchases.”

“A big part of our marketing concept includes prestige, utility and security. We want you to feel that whenever you travel with the card, if you have a problem you can feel secure to pick up the phone and call us. And now we’re trying to cover every aspect of your life style.”

Obviously, a credit card war has erupted. “It’s a confusing battle,” MasterCard’s Kendrick said, “but ultimately the consumer will win.”

Which card to choose?

It’s not easy, especially if you take some credit card ads at face value.

In a recent major advertising campaign, Visa announced that it was the official credit card of the Summer Olympic Games and that the games “don’t take American Express.” A similar announcement said that the National Football League had selected Visa as its official credit card.

“The implications of that advertising are very misleading,” Cooperman said. “The fact is they spent millions of dollars to get the rights to use their card on the Olympic site, and that’s it. But the impression is that no one accepts the American Express card at all in Korea.”

Cooperman launched a counterattack, claiming in advertisements that the American Express card is widely accepted in Korea (and it is). “We were the first ones in Korea,” he said, “and we were there way before someone even thought of marketing a Visa card.”

The Visa NFL announcement means only that Visa has been selected as the exclusive credit card for buying tickets to the next Super Bowl in Miami.

Car Insurance

Then there are the credit card claims about rental car insurance. Virtually everyone who has ever rented a car hates the additional collision damage waiver and personal accident insurance coverage, which in some cases can be as high as $18 a day. Now MasterCard, Diner’s Club, Carte Blanche, Visa and American Express market credit cards that offer auto-rental insurance plans free to card holders.

Do these programs work?

“Absolutely,” MasterCard’s Kendrick said. “We’re processing several hundred claims a month, and the numbers are growing all the time. The card holder who rents a car with his Gold MasterCard now has peace of mind.”

Not necessarily. Here’s how it works: According to American Express, if you rent your car with the American Express Gold Card, “loss and damage coverage for up to the full value of the car is yours. Automatically.”

But read the fine print. American Express insurance “will reimburse you up to $50,000 for collision damage repairs to the rental car not covered by the car rental company, your personal insurance or your employer’s insurance or reimbursement plan.”

‘Claim Is False’

“The claim that the renter is covered ‘automatically’ is false, misleading and deceptive,” Robert Solomon, senior vice president for Dollar Rent A Car in Hawaii, said.

“What this means is that the insurance program provides for coverage only after a renter exhausts personal insurance or his or her employer’s insurance or reimbursement plan.”

The same applies to insurance offered by the Gold MasterCard. “Yes,” admits Kendrick. “It is secondary coverage. But we’ll handle all the paper work and claim filings.” (Under the American Express plan you are responsible for submitting all claims, police reports, et al.)

What happens if you lose a credit card overseas?

In ads for the Gold MasterCard, claims are made that replacement cards will be delivered virtually anywhere.

Not really. MasterCard and Visa depend on a network of member banks that may, or may not, cooperate quickly and efficiently to replace a lost or stolen MasterCard. That’s where American Express may have an edge.

“We have offices and people that we control--they’re our people,” Cooperman said. “If you have a problem, you walk into an American Express office and speak to someone who speaks English.

“Besides, we’re in the travel business. A secondary branch bank in Budapest or Lucerne with a MasterCard decal in the window is not. What’s the likelihood of a member bank in Korea bending over backward to help a Citibank Visa member in New York City?”

Medical Assistance

What about emergency medical assistance?

This is where both MasterCard and American Express do good jobs. American Express calls its service “Global Assist.” MasterCard’s is labeled “Master Assist.”

Both offer 24-hour hot lines with experienced medical personnel on duty. And both will evacuate seriously ill and/or injured card holders. (Gold MasterCard evacuates an average of three card holders a week.)

And finally, just when you thought you had been solicited to become a member of every conceivable frequent-flier/frequent-hotel guest program, Gold MasterCard comes along with an expanded “Master Plan for Travel” incentive program.

Last year more than 370,000 card holders earned free or discounted travel using Gold MasterCards.

And now, each time a consumer uses the Gold MasterCard to make a minimum purchase of $25 at any hotel, airline or rental car company through Dec. 31, 1989, he receives a “travel transaction” point.

Point System

When he receives four points (level I), he gets $25 off of one round-trip airline ticket of $200 or more, 15% off of room charges at any participating domestic Sheraton hotel and small discounts on rental cars.

After 60 travel transactions (level IV), the Gold MasterCard holder gets a free round-trip ticket within the continental United States, Mexico or Canada on United Airlines. The top level--200 transactions--offers two free round-trip tickets to London, Paris or Rome on British Airways.

“We expect a certain amount of double dipping to go on because of affinity cards,” MasterCard’s Kendrick said. Affinity cards? In the credit-card wars, major airlines also are marketing their own Gold MasterCards, complete with logo, that reward any purchase with frequent-flier points.

“We expect to have several hundred people reach our top award levels,” Kendrick said. “Thousands more will use their American and United Gold MasterCards to earn points in both programs.”

Now, if you could only use the cards to pay your monthly bills. . . .