Word: amex
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...wave one's little piece of green, gold or platinum plastic, and waiters and clerks would fawn prettily. Such potent snob appeal once seemed irresistible -- until American Express "cardmembers" began weighing the costs of privilege against the benefits of more plebeian credit cards. While the AmEx elite shelled out annual fees, Discover clients were issued free cards. Amex users had to pay their bills in full each month; savvy bank-card customers enjoyed revolving credit at modest interest rates. AmEx clients could brandish their cards in 3.7 million upscale establishments worldwide; Visa cards opened 11 million doors, MasterCard 12.3 million...
...future on a new set of credit cards with an accent on lowbrow utility and coupon-clipping value. This week it will begin to roll out some dozen cards, each one pitched at a different segment of the consumer market. Some cards will bear the exclusive imprimatur of AmEx and will boast waived fees; others will share billing with other companies that offer a range of enticements, like frequent-flyer miles and car discounts. All will offer revolving credit at rates expected to rival AmEx's less tony rivals. And where business travelers were once AmEx's preferred clientele, every...
...sounds like brutal, elemental capitalism, it is. But American Express's friendlier, market-dictated face won't appeal to consumers if they can't use the new cards when and where they want. In recent years, AmEx has been chucked out of establishments by owners who were no longer willing to pay an average fee of 3.2% per purchase (as compared with 2% for Visa and MasterCard). A chastened Amex has now chopped its vendor fee to 2.8%, and the ploy seems to be working. Since 1992, the company has moved boldly into / establishments regarded by consumers as plastic-essential...
...wholesale leap into revolving credit is a gutsy move for American Express, whose recent ads have featured Jerry Seinfeld musing adenoidally about what the company has referred to in less lighthearted moments as the "evils of debt trap." AmEx's own maiden voyage into revolving credit -- with the launch of the Optima card in 1987 -- resulted in a plastic meltdown. The program quickly racked up $1.5 billion in unpaid charges, a figure twice the industry average, according to Robert McKinley, president of RAM Research Corp. Since March 1992, when the loss rate peaked at 12%, AmEx has wrestled bum credit...
...even such battle-hardened successes do not assure victory for AmEx in its quest to reclaim the top standing it lost in 1989 in the $562 billion credit-card industry. The U.S. market is saturated with 1 billion pieces of plastic, issued by 6,500 companies. "Industry competition has turned into quite a fray," says Mark Tonnesen, president of credit-card services for Bank One in Columbus, Ohio. "The winner in all of this is the consumer." Even AmEx's Skillern acknowledges that "the world probably doesn't need a new credit card," though he remains confident that "consumers will...