Old Apr 21, 04, 11:27 pm
Join Date: May 2002
Location: Arizona
Posts: 4,888
Lookout Amex your Platinum/Centurion cardholders will switch to Merrill Lynch Visa

Amex your being attacked...What are you going to do? I think Merril Lynch has a little more clout than Stratus Rewards...Free Ritz hotel stays without using points
Cruise upgrades,Air travel using points...This sounds like a neat product and I am thinking of switching to this product.

A New Contender for Your Wallet

Merrill Jumps Into Card War
With No-Fee Rewards Offer,
But Does It Beat Platinum?
April 20, 2004; Page D1

Last year, Merrill Lynch clients withdrew $3 billion from their accounts to pay off credit-card bills. Now the company wants a piece of that action.

Merrill Lynch & Co. today is introducing its own new credit card, the Merrill+ Visa, which it's launching with card giant MBNA Corp. The card's major selling points: generous benefits with an ultra-low interest rate and no annual fee.

The company is joining a growing number of brokerage firms that are offering their clients plastic, part of the industry's push to capture as many of their customers' financial transactions as possible. Last month, the Smith Barney unit of Citigroup Inc. launched a new MasterCard that offers cash refunds and American Airlines miles. UBS AG, Charles Schwab Corp. and Morgan Stanley offer debit cards with their accounts but no credit cards.

Merrill, which has offered a debit card with rewards for several years, faces stiff competition in the credit-card arena. Banks have been bombarding their affluent clients with offers for a long time now. Most of them already have a card at the top of their wallet that earns them hundreds of dollars of cash rebates or tens of thousands of frequent-flier miles per year.

In an attempt to dislodge those cards, Merrill is offering its card with no annual fee, unlike most similar cards, plus an interest rate of 5.9%. (While interest rates are rarely fixed permanently, Merrill doesn't anticipate having to raise its own for at least 12 months.) Cardholders will earn one point per dollar charged and can then trade those points for free airplane flights.

The new Merrill+ Visa credit card.

The big spenders among them will also get cruise upgrades, massages and free nights at Ritz-Carlton hotels. These cardholders don't have to redeem any points for the rooms; they just have to spend a certain amount of money annually to get them. While Merrill is aiming its pitch primarily at current customers, others will be able to apply for the card as well.

The big brokerage firms' push into plastic comes at a time when every card company is marketing multiple rewards cards. For the three months ended Feb. 29, 53% of all direct-mail pitches were for cards that earn cash refunds, travel, or other rewards. That's up from 30% in the same period two years ago, according to Mintel's Comparemedia, a tracker of such offers.

During the past year, Bank One Corp. alone has launched at least half a dozen new rewards cards aimed at the same upper-income consumers that the brokerage firms are chasing. One offers up free Starbucks coffee, another grants discounts on Audis, and a third sends donations to a breast-cancer organization.

Merrill's program allows cardholders to trade the points they earn for plane tickets on four major airlines, which will be announced in coming weeks. For 25,000 points (30,000 for non-partner airlines), they can book trips of up to $500 and go anywhere in or out of the USA, as long as they book at least 21 days in advance and stay over a Saturday night.

This compares favorably with other rewards schemes that offer similar point ratios for domestic travel, though competing cards often offer no international option at that point level. There is no cap on the number of points cardholders can earn each year.

The new Merrill card also borrows the airlines' idea of assigning elite status. Users who spend at least $20,000 in a calendar year graduate to the first level, and those who cross the $50,000 threshold land in the top rank. Merrill's elite cardholders are eligible for better cabins on Princess and Cunard cruise ships, upgrades on certain British Airways flights, and massages at Canyon Ranch and other fancy spas.

But the perk that's likely to resonate the most is the free nights at Ritz hotels. The $20,000 spenders get one per year, while the $50,000 chargers get a total of four. Without the card, four nights at the Ritz could easily run more than $1,000. The card also offers medical-evacuation insurance for people who hurt themselves in faraway places.

While no one, of course, chooses a brokerage firm on the basis of the credit card it offers, the absence of a credit card is a clear gap in the product line of any financial-services firm with ambitions to be a one-stop shop. Brokerage firms also see credit cards as a way to make their revenues more predictable.

In terms of rewards, Merrill's offering is one of the more generous cards in recent years. So consumers have every reason to wonder whether Merrill plans to slash away at the goodies or spring an annual fee on them after a year or two. In fact, Merrill's record isn't good in this regard. A few years ago, it raised certain reward-redemption rates for debit-card holders by 50%, infuriating many customers. Eileen Serra, Merrill's head of consumer banking, says of the new card, "We've been very cognizant when designing awards of making sure we could afford them."

Big spenders who like fancy hotels and free domestic-coach travel may want to switch to the Merrill card, which offers lower fees and more benefits than Smith Barney's new card. (If you don't have a Merrill broker who can sign you up, you can apply at www.card.ml.com.) But people who value frequent-flier miles for their first-class upgrades and international travel opportunities may want to stick with an airline card. Or they could use American Express Co.'s Green, Gold or Platinum cards, which offer points that customers can trade for merchandise or frequent-flier miles. Because premium seats can cost thousands of dollars, it makes it hard to purchase them with Merrill points. People with lots of miles will usually get more value out of their rewards for this type of flight.
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