Gold cards becoming a more common currency

Gold cards offer high credit limits and low interest rates to creditworthy customers, writes Laura Slattery

Sometimes, when flashing plastic money, it's nice to get that glittering effect. For people in high-income brackets with a healthy credit rating and regularly itchy feet, going for gold might seem like an attractive option. But what are the advantages of owning a gold card over a standard credit card?

Lower interest rates and a higher credit limit are the two main selling points. "The gold card is for creditworthy customers and, therefore, it can be offered at premium rates," says a spokeswoman for AIB.

In July, the APR on AIB's gold card was reduced from 15.9 per cent to 14.4 per cent on purchase transactions. Then, Bank of Ireland shaved one percentage point off its offering, reducing its gold card rate to 14.3 per cent APR on purchases.

People who qualify for a gold card are "comfortable with plastic", according to Mr Paul Gurhy, head of marketing of Bank of Ireland's consumer lending division. They can have up to three additional cardholders on their account and there are no penalties for late payment or exceeding the credit limit, which is a minimum of €3,810.

When gold cards were first introduced in the 1980s, users paid high annual charges to benefit from lower interest rates and create an impression of wealth.

"A gold card is aimed at the top 10 per cent of the customer base and, therefore, it is more exclusive than the standard card," confirms a spokeswoman for AIB.

In the US, the market has moved on to platinum - a different colour metal for essentially similar products. As status symbols, gold cards have lost some of their allure in recent years, partly because it's easier for more people to get them.

"When we first launched the gold card, the minimum income needed to apply was £20,000. Now it's €25,000. It hasn't increased in line with the boom and salary increases, so there would be more people falling into that category," explains Mr Gurhy. However, to qualify for the higher credit limit on its gold plus card, applicants are likely to have an income above €38,100.

An annual fee of €76.18 is charged for Gold Plus and, at Bank of Ireland, it is this product that includes the additional travel insurance features designed to attract frequent as well as high fliers. This covers medical expenses, personal accident, personal liability, lost baggage, flight delays and cancellation, once the card has been used to pay at least 50 per cent of the fare.

At AIB, a travel insurance package can be obtained through its regular gold product for an optional premium of €50.79 a year, which the spokeswoman says is "very competitively priced". One other family member or close friend can be nominated as an additional cardholder on the account.

If a holiday is paid in full on a gold credit card issued by MBNA, some travel insurance features will be included for free and there is no annual charge for the card. A credit limit of up to €31,745 is available, depending on the applicant's financial status. Applicants for gold cards at all three issuers must have a minimum income of €25,000.

"There has been a lot more activity in terms of marketing and promotions by the banks on gold cards," says Mr Gurhy. "It is for the more attractive customer. We would actively approach people with a standard card if we think the gold card would be a better product for them."