Credit card battle launched for 'upscale' clients

Both MasterCard and Visa would like to line your pockets with gold, or at least a ''gold card,'' similar to the one American Express has offered to some customers since 1966.

The entrance of both bank credit card companies into what has been the exclusive domain of American Express, analysts believe, is sure to result in a marketing scramble to entice the economic top 10 percent of the population. The well-to-do people in this group are known in the business as ''upscale'' buyers.

The first MasterCard challenge to American Express has come from Chemical Bank, a New York bank known mainly as a local retail banker. Chemical Bank has decided to offer a golden MasterCard in a 12-state area in the northeast part of the country. According to Bill Primosch, vice-president at Chemical Bank, the bank has begun to mail 600,000 brochures and applications to potential customers ranging from Maine to Virginia and as far west as Indiana.

At least three other banks, Continental Illinois, in Chicago; Valley National Bank, in Arizona; and National Bank of Detroit will also begin marketing golden MasterCards soon.

Mr. Primosch says the main difference between his card and others is that ''the golden MasterCard is designed to give more financial flexibility than a normal travel and entertainment type of card.''

Banks issuing Visa cards will begin marketing their premium card on Feb. 1. In the meantime, it has begun to hold seminars for some of its 12,000 member banks, gauging interest.

Already, American Express, known for its canny marketing abilities, has begun a selective advertising campaign, telling what it hopes are ''upscale'' readers of the New York Times Magazine to ''speak softly and carry a big stick.'' An American Express spokeswoman, Nancy Muller, says, ''Based on our 22 years of experience and research, neither of the new gold cards just coming on the market is what our card members tell us they want.'' Furthermore, claims Ms. Muller, ''neither begins to offer the service we do.''

Jack Cox, president of AECS Ltd., a consulting service affiliated with Keane Securities, a brokerage house, agrees that duplicating American Express service is going to be tough.

''I've been to Florida and seen American Express's facilities, and it will be tough to match it,'' he says. ''They have career-minded people who are alert, intelligent, and responsive. . . . If you are creating a similiar product, you must create service that is familiar so that the upscale guy will forgo his American Express gold card to get it (a gold card of Visa or MasterCard) from a bank, which is not always known for service.''

Mr. Cox says another advantage American Express has is its ''country club'' billing. Each monthly bill contains a hard copy of the item charged, which is useful for people during tax season. Bank charge statements, by way of comparison, only descriptively list the item purchased without including a copy of the actual purchase ticket.

At stake are the credit card purchases of the relatively prosperous. Currently, American Express has 1.7 million gold cards outstanding. These cards are issued by banks, often the individual's own bank, which provides a line of credit, currently a minimum of $2,000.

Although American Express will not disclose the minimum income necessary to qualify for such a card, industry sources indicate it is at least $20,000 per year for a $2,000 line of credit. For a $5,000 line of credit, one banker says a person would have to have at least a $40,000 annual salary.

Mr. Primosch says Chemical Bank would be happy if it received 10,000 to 15, 000 accounts. Since 120 banks have applied for licenses from MasterCard to offer a gold card, he figures the competition will get stiff.

According to Mr. Cox, the competition will be keen for the business because it is quite profitable. ''I would suspect that American Express's profits are larger on the gold card than on the green card,'' he notes, adding, ''The bad debt exposure is less. There are more charges with a higher ticket value and thus more profits.''

Ms. Muller had no comment on American Express's gold card profits. But she did note that this year the credit card industry has lost several hundreds of millions of dollars on its regular card operations. High interest rates meant high costs for money which, because of state usery laws, could not always be passed on to card cukstomers, thus squeezing profit margins for many banks. Fraud problems have also hounded the bank card issuers.

For many banks, there will be a dilemma because they will be offering both an American Express gold card and a bankcard gold card. At Chemical Bank, which issues both, Mr. Primosch says, ''We're not ready to drop American Express. Some people don't need $5,000 in credit. But the upscale guy who needs the cash advance features and the 24-hour customer service may be interested.'' However, Mr. Cox believes banks that carry both cards ''will scale down marketing American Express gold card.''

Consumers are not always receptive to the Amex gold card and its $50 fee. Jill Totenberg, a senior vice-president at Ruder & Finn, a public relations firm , says she turned down an invitation to apply for an American Express gold card. ''I don't need the credit line and I don't travel enough to make that credit line necessary,'' she says.