Friday, November 17, 2006

The Lounge

We all get them—the credit card applications. The better credit you have, the more letters you get in the mail, proposing that you should get one more credit card.

Funny thing is that many of those cards advertise themselves as a way to buy more, as if you’d never have to pay back anything. I can’t stop being amazed at the promises they make, as if they were little magic wands.

And when you try to find out how much it would actually cost to use the cards, you find microscopic, dense, text with all kinds of legal mumbo-jumbo. In the end, it usually says that the card company can change any of part of the cardholder agreement whenever they want to. And you can usually say goodbye to that bold introductory rate pretty much as soon as you get the card.

Many fall into the credit card trap and end up with debt on their back and nothing to show for it except exorbitant interest rates and sky-high penalties when banks “forget” to apply payment to the balance. A big part of this industry is really nothing but a legalized scam.

No wonder that there is not a single industry with more consumer complaints lodged against them than the credit card companies.

But sometimes the credit card companies do something really unexpected.

Yesterday it was American Express, which really surprised me. As I walked though the local shopping mall I suddenly discovered a fancy new café. Only it wasn’t a café, it was an American Express Lounge. I’d never seen anything like that, except for the business class lounges at airports where the wealthy travelers with expense accounts separate themselves from the poor peasants who have to pay for their own ticket.

In fact, this new facility looked just like a very exclusive airline lounge.

So I asked what was going on, and the gentleman charged with admitting only American Express card holders informed me that American Express wanted to “give something back to their customers.”

Of course, I’ve never met a single corporation that didn’t want something in return for “giving something” to their customer.

But as I took a tour of this secluded oasis, free of people who hadn’t had the foresight and wherewithal to get an AmEx card, I had to admit that this concept was pretty smart. I mean, I know all those card companies waste endless amounts of money on ads, commercials, and other things that give me no pleasure whatsoever.

But here, in an attempt to make the AmEx card really cool, they offered a free lounge, with designer furniture, coffee, and other goodies.

I think such an initiative should be encouraged.

Imagine if we could get more corporations to do the same thing? Instead of advertising and direct mail, you’d have the Chrysler Lounge, the Mars Chocolate Bar, the Citigroup Funplex, and so on. All of them free for their customers.

That would be marketing which actually returned some value to their customers.

Of course, American Express offers other rewards as well. If I spend a minimum of $250,000 per year I may be offered a Centurion card, made of hand-crafted titanium, which reportedly makes it feel more solid than a conventional “plastic” card. Allegedly it offers a desirable “plunk-factor” when dropped onto a desk.

I can’t imagine every reaching such a spending level, so I guess I’ll have to get used to the thought of continuing to use plastic. At least now I’m welcome in my own private lounge.

Then again, I can’t help being reminded of Groucho Marx’s famous words: “I don't care to belong to a club that accepts people like me as members.”


Anonymous said...

"Of course, I’ve never met a single corporation who didn’t want something in return for “giving something” to their customer."

Considering the fact that for the mere privledge of obtaining an AmEx card you are required to pay an annual fee of $100 (on average), not to mention paying your balance off monthly...

Let's see 7.5 million accounts = a billion dollar a year industry.

Hmm, being in the providing privledge business, has it's rewards.

Anonymous said...

Forget 1 billion, from their website - "we now have a worldwide customer base bringing in over $21 billion in annual revenues"

Oh, and,* -

Kenneth Chenault
Chairman and CEO, American Express

Henry McKinnell
Chairman and CEO, Pfizer

*Source NYMag

Peter Rost said...

Perhaps we'll see more lounges . . .?

Anonymous said...

Geez, what am I missing! I am overweight, and already have a "plunk factor" ;). Next time I will just plunk myself on top of a desk to make an impact, before I plunk myself down on a chair. How stupid can we all get. There are, of course, numerous other "plunk factors", such as the big oversized vehicle you plunk too many groceries and other things you absolutely (do not) need in. And do not forget the gas and all the money it costs, you plunk into that "veee hick all". The emissions you plunk factor into the air. And all that money you plunk factor everywhere, with nothing to show for it. Oh, well, now I get it. The plunk factor applies to those who cash in on all that plunking. It is the newest version of the cash register tune. You know, if I keep all that plunk factor money I can have the same designer furniture right here in my stick-built apartment box. And after that, I can build my own concrete and brick "not so big" home, to move the designer furniture to. Eh...I think.

Anonymous said...

"Perhaps we'll see more lounges . . .?"

I have two words for you - dream on.

Since I'm going to Viva Las Vegas next month, I'm in a gambling mood. I'm willing to bet AmEx's Short Hills holiday season experiement isn't going downtown in the near future. Come January, they'll quietly close down the operation, and chaulk it up as not cost effective enough. Get your free gift wrap and a latte while you can.

Peter Rost said...

By the way, for those of you interested in more pharma stuff, there is a new blog, which just came along: Pharma Giles, which has a promising beginning.

Anonymous said...

I have no complaints with American Express. I have the business card.

Btw Doc, how do you like your Black Amex card? ;) hehehe

Anonymous said...

In another galaxy far, far away...

Hey Peter, did you happen to catch the latest installment of JP's blog over at Huff 'n Stuff today? It's quite a little coincidence that you'd both be plugging the same mega corp., on the same day. In their case, JP & Co. collect $$$ for passing GO.

Anonymous said...

Pharmagiles looks a lot like the former peterrost, background and all, fourty something, a wife, however, just one child. Hm. Pictures. Someone's alter ego?

beeta said...

I have been counting, I admit!
Not the number of Democrats that got elected in the midterm elections,
Nor the number of Republican gays,
Not even the number of evangelical gay pastors (as fun as that may be),
But the number of comments you have been getting on your posts.
So here it goes, KO style:
And number five story in the line up is.....drum roll......
-AMEX lounge with 9 mentions....the new advertising gimmick (we shall find out the faith of the venture shortly).
And number three spot goes to the lovely Britney with 18 mentions.....whose faith shall be known in nanoseconds ( if not already known and ulogized).
Revolusion takes the number two slot in today's countdown with 22 bloggers giving it merit.
Are Wistleblowers crazy people takes the number four slot with 13 people giving a damn.
And the faith of "This Blog" wins the number one story of tonight's show with not a naked lady in sight (and not even a naked male butt disguised as a Holloween Pumpkin) with 34 comments!
What have we got here?
A serious web site?
God forbid, but people have spoken!
And the people shall rule (does that mean that sexsy Pharma Reps have to shiver?)
Not yet, but soon, I hope!

beeta said...

And now to shed a bit more light on tonights results we have the lovely blogger Beeta.
KO: What do you make of these results Beeta?
Beeta: Well, it seems to me that when reality comes as close as the faith of your favorite (or one of your favorite) websites, people are willing to put their two cents in, no matter what the consequences.
KO:Does that mean that the faith of the US Constitution is less important than the faith of a website?
Beeta: Not really, the Constitution is just not as real as the website. I mean, it doesn't touch you as personaly as Dr. Rost does (at least till they haul you off to jail for no good reason, and then you will look to websites such as this to get your story out there).
KO: Does Ms. Spears ranking in the line up threaten AMEX?
Beeta: No, an anonymous AMEX official has verified that AMEX is planning to hire Ms. Spear to sit in the lounge wearing a provacative outfit while the sex tape her husband threatens to expose plays in the background.
KO: How should potential whistelblowers interprete tonights results?
Beeta: Well, I should warn potential whistleblowers that the activity is somewhat dangerous, but on the bright side, being wedged between AMEX and Ms. Spear is not such a bad place to be!

Kansas said...

I see Beeta's into the box-o-wine again... :>

Karen said...

Or chugging straight from the bottle ;)

How about instead of lounges, corporations provide day care for their workers, or maybe donate to military families who need assistance. Most of the enlisted people with families certainly need assistance, as the US govt. doesn't see fit to pay them a wage that they can live on. I think the money could be put to better use than lounges. I suppose there wouldn't be the advertising bene from such things, but they would probably at least be tax write-offs.

Kansas said...

Cait said:

"How about instead of lounges, corporations provide day care for their workers, or maybe donate to military families who need assistance."

Oh Cait, I love it when you go off into fantasyland! This would only happen if the big corporations actually cared about anything other than the bottom line. This country is so into living above their means that the credit card companies don’t even have to pretend to care about it’s customers.

Ok Beeta, how much do we love the Doc’s new format!

Karen said...

What was I thinking? You're right, Moo. It must have been a laspse of sanity. Fairly frequent with me, it seems.

beeta said...

I like it a lot.

Anonymous said...

"What was I thinking? You're right, Moo. It must have been a laspse of sanity. Fairly frequent with me, it seems."

Goodness Cait. Sit down and have a drink. We need to have the "facts of life" talk.

There's not much difference between Willie Sutton the bank robber and the CEO of XYZ Corp, except one is recognized as legal by the system. (ie see Jack Welch, Ken Lay, (insert name here)).

In Jack Welch's case, when you get caught by your wife, have the good sense to pay her what she asks, otherwise people will see that the ex-CEO really wasn't that smart afterall.

Anonymous said...

In response to the first comment - there are American Express cards with no annual fee. I have one... I would never pay an annual fee for a credit card.

I think this is a very nice idea. I would definitely be more inclined to used my AmEx card if they put in a free lounge at the local mall... not that I ever go to the mall, anyway. But using the AmEx card instead of another card doesn't cost the consumer anything (at least not directly).

Anonymous said...

I like reading Warren Reports on the Middle Class.

It covers a wide range of economic issues.

For example this one on credit card lending practices...
Godless Bloodsuckers.

Anonymous said...

Here's another one I read fairly regularly.

MsMelody said...


Great Link (Godless Bloodsuckers). I'm off now to visit the site referenced there.

Has ANYONE read the 3-point fine print on a credit card agreement. (1) The consumer agrees to arbitration by acceptance of the card; (2) The credit card issuer may change the terms anytime they want, with or without notice . . . seems like a good way to write an agreement, to me. Wouldn't it be nice if the average American could craft this kind of agreement to benefit him/her?

Something along the lines of

"By accepting and using this credit card, I, the consumer, may change the interest rate at any time (I choose 0%); I may, if need be, submit payments late without incurring ANY penalty; I may sue the card issuer if it can be determined that the issuer authorized dinner-time telemarketing intrusions into my privacy for the purpose of selling me additional credit card insurance protection.

Kansas said...

Alex said:

"There's not much difference between Willie Sutton the bank robber and the CEO of XYZ Corp, except one is recognized as legal by the system."

"A man with a briefcase can steal more money than any man with a gun." - Don Henley

Anonymous said...

I realize I am coming a little late to this dance, but what exactly is inside this lounge?

A place to sit down and relax? Drinks? Bar? Food?

Back Massages?

Just curious.

Peter Rost said...

Just coffee, cookies juice and snacks, I think . . . like an airline lounge. I did't actually stay yet. Will maybe report back!