Carte Blank

In the fight between Diners' Club, American Express and Carte Blanche for the nation's credit-card business, someone, and perhaps everyone, was bound to get hurt. Last week Carte Blanche admitted that it was hurt--and badly. For the fiscal year ending April 30, President Benno M. Bechhold estimated that the Hilton Credit Corp., which set up Carte Blanche, would lose $4,000,000. The reason: "Our unsatisfactory collection experience."

When Carte Blanche shouldered its way into the credit-card field two years ago, American Express and Diners' Club were already there. To get business, Carte Blanche agreed to take a lower (4%) share on the bill from restaurants and other firms that signed up with it, issued cards to some credit risks who would not have been okayed by the other companies. But the Hilton card never caught up with its competitors, nor came close to turning a profit.

To rescue Carte Blanche, Hilton Hotels Corp. Chairman Conrad Hilton and several associates two months ago pumped $5,000,000 into the corporation to cover credit losses, put in Bechhold as president to replace Conrad Hilton's son Barron. To cull out bad risks, Bechhold at once tightened the credit check (the new minimums: 25 years of age, a $7,200 salary, and "an established pattern of wise and consistent use of credit"). He also is putting into operation next month an IBM computer system to check daily on the state of accounts, send out reminders to delinquents.

Diners' Club, which started on-the-cuff living in 1950 and is still the largest company (with 1,100,000 cardholders and 63,000 card-honoring establishments), has emerged least hurt from the scuffle, though its growth rate has been slowed. For the fiscal year ended March 31, it expects to report a slight gain over last year's $1.47-per-share profit. Though at first Diners' Club tried to meet competition by reducing its credit standards, it soon hiked them back up after its loss rate from defaulters rose from one-fourth of 1% to three-fourths of 1%.

American Express has fared less well. Though it has built up a list of 800,000 cardholders and 47,000 establishments, and handled $120 million in charges last year, the credit-card operation has yet to show a profit, though it hopes to be in the black by next year.

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