With loans to consumers with bad credit blowing up all over the place, it's only natural that banks would turn their attention to the other end of the spectrum: credit for the extremely rich, or at least extremely credit worthy.
The field for elite credit cards is growing increasingly crowded with products offering select customers outlandish perks like access to private jets and personal shopping services for spending hundreds of thousands of dollars using their plastic.
Bank of America joined the field last month with its Accolades card, issued on the American Express network. It includes a fairly standard set of perks, like access to premium concert tickets, airline rewards programs and the like, and Bank of America will wave the annual fee for customers who stick with its private wealth and investment management division.
- In pictures: World's most exclusive credit cards
- In pictures: 10 ways to improve your credit
- In pictures: Seven steps to identity theft prevention
The card coincides with the Charlotte bank's acquisition of U.S. Trust, a private bank that caters to the super rich, though Paige Brockman, credit and banking executive at the company, says it was in the planning well before that $3 billion acquisition was announced.
Still, U.S. Trust vaults Bank of America over JPMorgan and Citibank in the ranks of private banks -- with $427 billion of client assets under one roof -- and puts pressure on it to make those newly acquired private banking clients happy.
Banking to the ultra rich has been long dominated by JPMorgan and big brokerage houses, like Morgan Stanley, where the threshold to just get in the door is often $30 million of assets or more. Strong brands have made it challenging for others, like Bank of America, to make a name in private banking without the boost that special programs can offer.
Cards are an obvious way into the market, and though lenders aren't going to make much in the way of late fees and interest charges (assuming rich people pay their bills on time and in full, which isn't always the case) they make up for it in the fees they charge to merchants to process transactions. American Express network transactions mean fees of about 4% each purchase, so a $60,000 car charged to a Black Amex could potentially rake in $2,400 in processing revenue.
Even if the issuer takes half of that and pays it back to cardholders in the form of outlandish perks, the profits are still good, says Curtis Arnold, editor of CreditRatings.com.
Everyone is playing catch-up to American Express, the 800-pound gorilla of high-end cards, with its invitation only Centurion (aka, Black) card legendary among Hollywood types.
The Luxury Institute's recent survey of customer preferences ranked Centurion first and its Platinum card second.
"Special access, unparalleled benefits and enhanced customer experience" were cited as the reasons. The survey was done online and targeted consumers with a minimum net worth of $5 million and $200,000 in annual income.
Of course, just because someone is rich doesn't mean these cards are for them. Amex Black carries an annual fee of $2,500 and a minimum annual purchase threshold of $250,000. A miser like Ebenezer Scrooge (pre-ghost visits) wouldn't necessarily want that. A spendthrift, however, might find it a great deal.
"The bottom line is you have to do a cost-benefit analysis," Arnold of CreditRatings.com said. "Do it just for status? Heck no. That doesn't justify the fee."