As more credit card companies compete for affluent customers, American Express is updating the benefits lineup on its premier card and raising the annual fee to $895.
The new fee represents a substantial jump from the previous $695 mark, but Amex maintains that the hike is justified by the expanded perks and partnerships it has cultivated.
These enhancements now include credits at Uber, Lululemon, Oura, and Resy, in addition to the travel and dining rewards Amex is known for. Streaming benefits have also been added to the mix.
“The $895 annual fee is shocking, however Amex counters with an earning potential of $3,500,” said Ben Danner, Senior Credit and Commercial Analyst at Javelin Strategy & Research. “Amex is sticking to its strategy of offering statement credits with brands like Uber and premium retailer Lululemon.”
“The problem is that if these credits are with brands that don’t resonate with consumers, then the card begins to lose value quickly,” he said. “General offerings like travel credits may have a wider appeal than brand specific credits. However, Amex has done its research, knows its audience, and is targeting them with these brand credits.”
Competing for Customers
This Platinum card update was unveiled several months ago, around the same time that JPMorgan Chase announced changes to its Chase Sapphire Reserve card, though full details weren’t released.
Shortly after, Citi announced the launch of its Strata Elite card, positioned to compete in the luxury space. Strata Elite carries an annual fee of $595, compared to Sapphire Reserve’s $795 fee.
One reason companies have raised fees and tightened lending standards is to better target affluent customers. This group is seen as more reliable and tends to spend more—one of the factors behind Amex’s dramatic increase in worldwide merchant acceptance over the years.
A Premium on Stability
This focus on affluent customers has also been driven by macroeconomic uncertainty. As inflation and higher interest rates have fueled mounting consumer credit card debt in recent years, stability has become increasingly valuable.
Another factor pushing issuers to strengthen their customer base is the recent merger of Capital One and Discover, which created the largest lender in the U.S. This competitive pressure, combined with the absence of imminent regulation on credit card fees, suggests that more luxury credit card offerings are likely ahead.
