As credit card debt hovers near historic highs, American Express and JPMorgan Chase are preparing to revamp their luxury credit card offerings.
Amex has long catered to a higher-end customer base with its line of cards that offer perks at airlines, hotels, and exclusives, all for an annual fee. At the top of its portfolio is the Platinum card, and American Express recently announced that major changes are on the way for both the consumer and business versions of this card later this year.
The $695 annual fee card is expected to offer more rewards and experiences for its luxury user base. In an interview with CNBC, Howard Grosfield, President of U.S. Consumer Services at Amex, said the benefits of the Platinum card would “far, far, far exceed the annual fee.”
American Express’ announcement follows news that JPMorgan Chase is planning a refresh of its Sapphire Reserve card. Although the travel and dining rewards card has been around for less than a decade, it has quickly emerged as a strong competitor to Amex in the premium space.
The Sapphire Reserve credit card currently carries a $550 fee, but there has been speculation it could rise as high as $795 once new benefits are rolled out. There is also talk that Amex might follow suit with an annual fee increase for its Platinum card.
A Piece of the Pie
These potential fee increases come as more credit card companies bolster their loan loss reserves in anticipation of higher defaults. Inflation has placed considerable weight on consumers, many of whom are struggling with mounting debt and elevated interest rates.
As these challenges persist, credit card issuers are likely to continue their focus on premium products.
“Everyone wants a piece of the pie when it comes to an affluent customer base,” said Ben Danner, Senior Credit and Commercial Analyst at Javelin Strategy & Research. “These are customers that are more resilient to economic downturns and market pressures, and—of course—spend more, which profits the issuers.”
“These are cards that are certainly competing for the same base, especially with the high annual fees which would dissuade most from wanting to have both (who wants to pay over a thousand dollar in annual fees?),” he said.
Changing Perceptions
Despite the fees, customers of all ages have been flocking to premium cards to reap the rewards. However, these perks do more than just attract customers, they also offer credit card issuers an opportunity to build relationships and reshape perceptions.
“I expect Amex to refresh some of its statement credit partnerships–maybe changing out Walmart+ credit?” Danner said. “For Chase, I’d expect some boosted travel perks and maybe a higher annual travel credit and additional rewards point verticals—perhaps to change its image as more than an enhanced travel card.”
