Credit Card Companies Trim Perks Some Plastic Purveyors Drop Costly Benefits For Cardholders

Gone are the days when you could walk out of a store carrying a Baccarat crystal vase, accidentally drop it on the sidewalk and automatically expect your gold card to reimburse the purchase price.

Visa U.S.A. Inc. has announced that starting March 1, banks and other issuers of Visa gold credit cards will no longer have to offer purchase protection - the insurance covering the cost of merchandise broken or stolen.

Although the Mastercard gold card and all American Express cards still offer the service, credit card industry analysts are noticing a general cutback on some of the perks companies use to try to entice customers to their cards in the first place.

“You can attach lots of bells and whistles to your card, but if the customer doesn’t care or doesn’t use them, what’s the use?” said Maria Mendler, spokeswoman for Citibank, the largest credit card issuer in the nation with 38 million cards.

The New York-based bank canceled two programs at the beginning of the year - extended warranties for products purchased with its cards, and guaranteed lowest prices, where the bank refunds the difference if you buy a product and then see it elsewhere for less money. Customer research found that the plans were under-utilized or under-appreciated, and weren’t bringing in new customers, Mendler said.

But Citicorp offers purchase protection on all its cards - even plain-colored ones - and will continue offering that insurance even after Visa drops the requirement.

Chase Manhattan Corp., which is to combine card operations with Chemical Banking Corp. as part of a larger merger later this year, also intends to voluntarily continue purchase protection, but it has already canceled an extended warranty program.

Visa spokeswoman Stephanie Caracristi said the company discontinued requiring purchase protection because research showed gold card consumers find it less important than other perks, such as free extended warranties.

“They didn’t rate it that highly,” she said. “Our goal in conducting our research and making changes as appropriate is making services useful to consumers.”

Neither Visa, Mastercard International nor American Express would say how much they spend on enhancement programs nor discuss how cost effective they are. But industry-watchers say they are not only expensive, they are subject to abuse.

“Some consumers seem to have an inordinate number of accidents,” said Bob Johnson, who runs the Credit Research Center at Purdue University in Indiana. “You would expect that, but to what extent have costs run beyond expectations?” Exactly how much is unknown, but American Express and Mastercard so far have decided to continue and have no plans to cut back.

“It’s a program that is somewhat expensive to administer, but is considered to be very valuable to card members,” said American Express spokeswoman Emily Porter. “It’s a service we want to provide.”

Still, consumers who went with some of the other companies are being slighted by what amounts to bait-and-switch tactics, said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group in Washington, D.C.

“They like to offer benefits that are smoke and mirrors,” he said. “They do a real disservice when they trump up these benefits and then take them away.”