The colour of money

Once upon a time having a Gold or Silver credit card in your wallet was a sign of affluence and success for some people — a little plastic status symbol. And in the music world it seems that tradition continues — former Oasis guitarist Noel Gallagher can be seen on YouTube boasting, tongue in cheek, about what his credit-limitless black American Express card could buy him. "I could walk into a showroom selling Boeing 747s and, regardless of whether I could afford it they'd have to accept the card."

And it’s true that the colour of a credit card may reveal something about the colour of its owner’s money, or to be more precise, their credit limit. For example, you may have seen Citibank's TV ads for credit cards with a balance transfer rate of 1.99% for 12 months. The interesting part is where Citibank recommends that people earning at least $20,000 should apply for a Silver Card, with a credit limit of up to $7000. Those earning $35,000 could be entitled to a Gold Card with a $25,000 limit. And if you earn $50,000 — about the average in Australia — a Citibank Platinum will enable some applicants to go on a $60,000 spending spree.

These seem like outrageous credit limits so we contacted Citibank to find out more. A Citibank representative said "amounts provided in advertising material are used to inform consumers about the upper limits of credit they may be eligible for, and to assist them in submitting an application for an appropriate Citibank product". And indeed, the terms and conditions state that the actual credit limit customers get "will be assigned based on Citibank's credit criteria". The Silver card's credit limit range is from $2000 to $7000, and for Gold the range is $7,001 to $25,000, subject to an assessment of the customer's application and credit checks.

Still though, it makes you wonder about the repayment difficulties some applicants could get into. Transferring your balance to a low interest card can be a good way to get your finances back on track, but it can lead to traps too. When the cards come with big credit limits like these, it’s not hard to see how many people rack up big debts at high interest. That’s how credit card companies make their money. We should probably all take note — even rock stars buying airplanes.