American Express offers cardholders frequent-flier plan


NEW YORK -- In its latest counterattack against growing challenges from Visa and MasterCard, American Express Co. said yesterday that it would sharply expand the ways travelers could accumulate frequent-flier credits.

Like competing bank "affinity cards" with ties to airlines, American Express will give its cardholders one frequent-flier mile for every dollar they charge on their Green, Gold, Platinum, Optima or Corporate cards.

Any purchase, whether it be flowers, sweaters, college tuition or vacations, earns the miles, which are redeemable for free airline tickets or ticket upgrades to first class.

But American Express' program, the company's first ever, hopes to spur both business travel and consumer spending, slowed by the recession, by offering some extras.

For example, cardholders could pool the credits into a kind of "bank." Charges made on cards of the members' spouses and families would count as well. The cardholders could then allocate the pooled credits to as many as seven airlines, instead of one per card, as with present bank-card programs.

The Membership Miles program will be free the first year but will cost $25 the second year.

The arrangements between bank cards and airlines have proved to be one of the most effective marketing tools in the sharply competitive travel and credit-card businesses.

Competition among credit-card issuers has risen in recent years, as a glut of cards and a similarity of services, like rental-car damage insurance, have forced issuers to offer more and more incentives for using their particular form of plastic. The recession's effects on both consumers and businesses have intensified that trend.

For instance, restaurateurs began to complain about the fee American Express charged merchants who accepted its cards because the percentage was generally higher than that of Visa and MasterCard. Earlier this year, American Express reduced the fee for some merchants.

In April, American Express announced a quarterly profit drop for its Travel-Related Services division, which is mainly the credit-card business. The unit's earning fell to $162 million from $215 million a year earlier. Quarterly charge-card volume fell 1.3 percent, to $25.4 billion.

Company officials cited a white-collar recession that slowed consumer spending and raised bad debts among its generally middle- to upper-class cardholders.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad