February 10, 2005 09:48 AM
Citigroup Plans Platinum-Card Rival
Excerpt: Starting next month, Citigroup Inc. will roll out the Chairman card, a MasterCard with a long list of features that are similar to ones that American Express Co. offers. The Chairman card, like the Platinum plastic, will offer airport-lounge access, free companion plane tickets, emergency-evacuation services and reserved tables at restaurants.
The American Express Platinum card is about to get a big new competitor.
Starting next month, Citigroup Inc. will roll out the Chairman card, a MasterCard with a long list of features that are similar to ones that American Express Co. offers. The Chairman card, like the Platinum plastic, will offer airport-lounge access, free companion plane tickets, emergency-evacuation services and reserved tables at restaurants.
While Citigroup is aiming its initial pitch at its Smith Barney brokerage clients, anyone will be able to apply for the card, whether they have an existing relationship with a Citigroup entity or not. The annual fee for the card is $400, $5 more than American Express charges for the Platinum card. Some Smith Barney clients with large balances won't have to pay the fee or will get a discount.
Peter Knitzer, the managing director of the Citi Cards unit, says the card wasn't designed against the American Express Platinum card specifically. "When we're developing products, we talk to customers and prospects to ask what they're looking for," he says. "We think Chairman stacks up against any program in the marketplace."
Other brokerage firms have made similar efforts. Last April, Merrill Lynch & Co., citing the $3 billion flowing out of Merrill accounts each year to pay off credit-card bills, decided to launch its own with MBNA Corp. While it offered points and perks, including the possibility of over $1,000 of free nights at Ritz-Carlton hotels each year, it also aimed its pitch wide with a low interest rate and no annual fee.
Citigroup's MasterCard that earns American Airlines frequent-flier miles is one of the most popular of its kind. More recently, it has aimed the new PremierPass card at travel hounds who are frustrated with frequent-flier miles, and targeted the Dividend Platinum Select card at people who prefer cash back. Now, Citigroup has set its sights on competing with American Express for the biggest-spending customers of all, even as it prepares to offer American Express cards of its own in the next year or so.
Citigroup's Chairman card will differ from the American Express Platinum card in a few important ways, particularly in the realm of travel rewards. American Express gives its customers points in its Membership Rewards program, then allows them to trade those points for frequent-flier miles on Delta, Continental and other airlines. The Chairman card, meanwhile, hands out proprietary points to customers and then lets them redeem the currency for free trips without having to transfer the points over to an airline's program. For instance, they can trade 25,000 points for a free domestic ticket on any airline.
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