Consumers Still Crave Elite Credit Cards Despite Fee Increases
Despite fee hikes reaching into the hundreds of dollars, the appetite for premium credit cards remains strong among consumers.
During a recent earnings call, American Express executives noted that early interest in the newly redesigned Platinum card has surpassed their expectations. CEO Stephen Squery mentioned, “New platinum account acquisitions are at twice the rate compared to prior to the renewal.” He described this as the company’s “strongest start” to a U.S. platinum renewal in the last decade, marking the third renewal in that time frame.
The revamped Platinum card, which debuted in September, now comes with an annual fee of $895. Squery pointed out that retention rates for existing customers have remained steady following the renewal, though the fee increase will not take effect for several months.
Some consumers have voiced frustrations over these rising costs as luxury credit card competition intensifies. For example, Chase recently raised fees on its Sapphire Reserve card while Citi launched the Strata Elite card this summer. However, Jeremy Burnham, Chief Financial Officer at JPMorgan Chase, claimed that the company has had no trouble attracting current holders of their $795 Refresh card.
“This has already been our best year for new customer acquisitions for our Sapphire portfolio,” Burnham noted during Chase’s earnings call.
Squery highlighted that Amex’s platinum benefits are appealing to a diverse age range, especially Millennials and Gen Z, who appreciate perks like wellness and entertainment bonuses.
Over the past few years, younger cardholders have emerged as a key demographic for AmEx. In the first quarter of last year, Millennials and Gen Z accounted for a noteworthy 75% of new Platinum and Gold accounts. In fact, Squery had previously mentioned that the company shifted its strategy, moving from no-fee cards to more luxurious options to attract this audience. As an interesting side note, CFO Christophe Le Caillec stated that Millennial and Gen Z cardholders typically complete about 25% more transactions than older users.
Overall, AmEx reported $421 billion in billed business for the third quarter, and by mid-afternoon on Friday, shares had surged over 7%.
