It is becoming quite fashionable to get non-plastic credit cards these days especially for the points and miles cards we like to use. There was a very interesting Wall Street Journal Market Watch article about the rise of these special cards and some fun facts behind them. I thought I would share.
By Quentin Fottrell
In order to attract more big spenders, credit-card companies are scrapping the plastic for fancy cards made of titanium, aluminum and steel. But with all the glitz and heft comes a little sticker shock — and not just because the cards conduct electricity.
The metal cards carry much higher annual fees, the companies say, to match their material, the higher-net-worth individuals who carry them, and the perks they offer. A titanium, palladium or stainless steel card could cost up to $300 each to manufacture, compared with just 15 to 50 cents for a plastic card, according to Steve Montross, CEO of CPI Card Group in Littleton, Colo., the largest manufacturer of payment cards in the U.S. Despite their cost, there’s been a surge in popularity over the past decade. The number of metal credit cards in circulation has grown to 10 million from just 15,000 cards back in 2005, according to CPI Card Group. “Credit-card issuers want to provide their high-end customers with something that’s different and unique,” he says. “It’s a status symbol.”
Some, like the titanium American Express Centurion, are both pricey and secretive (it has no website). It has a one-time initiation fee of $5,000, in addition to a $2,500 annual fee for the first and subsequent years. “American Express will do anything for a Centurion customer, who will think nothing of charging a private jet on their card or buying $100,000 worth of jewelry,” says Jason Steele, credit-card expert for financial-advice website Credit.com. It’s an “ultra-high-end product” with concierge services and a complimentary first-class companion airplane ticket on selected airlines with each first-class ticket bought, Steele says. An American Express spokeswoman declined to disclose the details of the terms and services as they’re customized, but she says reports of a $250,000 minimum monthly spending requirement are “a myth.”
Like many things in life that double as status symbols, metal cards may have a shelf life. Don Sabatini, managing director at SecretEntourage.com, a luxury lifestyle website, started using the American Express Centurion six years ago and would use it in a conspicuous fashion when he socializing (and networking) with a high-net-worth crowd, but he says he uses it less often now. “When you’re in that crowd where other people have these kinds of cards too and notice yours, it serves a purpose,” he says. The opposite is true too: A burger bar in Hollywood, Fla., once refused the Centurion because the cashier didn’t think it was real. And these days, he says, his peers are less impressed. “When you have the Lamborghini and the watches, the card doesn’t do as much,” he says.
J.P. Morgan Chase & Co. (JPM) has several metal cards, which, while expensive, are loaded with perks. The Palladium card includes a laser-engraved signature for security; it has a $595 annual fee, but no foreign-transaction or cash-advance fees, and no over-limit or late fees. There’s a concierge service, and, as part of its travel rewards, it gives 35,000 bonus points once the customer spends $100,000. The Sapphire Preferred card ($149 annual fee after the first year and 15.99% APR or annual percentage rate) offers valuable points in Chase’s Ultimate Rewards program that can be instantly transferred to points or miles with several different airline and hotel programs, and Amtrak, Steele says. Double points are offered for travel and restaurant purchases.
Despite the high costs, some experts say they like the metal cards. Ben Woolsey, president of CreditCardForum.com, a review site for credit-card users, recently signed up for Chase’s Marriott Rewards Premier card ($85 annually after the first year and 15.24% APR) with metal inlay. “This card is one of the better hotel reward cards,” he says. It offers 50,000 points as a sign-up bonus after spending $1,000 in the first three months. The use of unusual materials, he adds, “is really just a marketing scheme and offers no enhanced functionality.” Odysseas Papadimitriou, CEO of CardHub.com, a credit-card comparison site, says that among the metal cards, points to Barclays’ steel Visa Black credit card ($495 annual fee and 14.99% APR), which gives users 25,000 bonus points for spending $1,500 in the first 90 days.
Not everyone agrees. “It’s just a gimmick to make the cardholder who’s paying a very high annual fee feel like they’re getting something no one else has,” says Ellen Cannon, personal finance editor at credit-card comparison website CardRatings.com. “They call it the plunk factor.” (When you slam it on the table at a restaurant, everyone hears.) “If you want all of the fancy perks of a high-end card — and metal to boot — you will pay more.” Still, credit-card issuers have clearly spotted a growing market among business travelers and high-net-worth individuals, Steele says. “Like jewelry, people use metal credit cards to impress,” he says. “But they’re not jewelry; they’re financial instruments. I wouldn’t spend $600 on an annual fee just because it looked nice, especially when I’m shopping online.”