Consumer interest in premium credit cards remains robust, even amid significant fee increases. During a recent earnings call, American Express executives shared that the demand for its newly refreshed Platinum card has exceeded expectations. CEO Stephen Squeri reported that the company is seeing new Platinum account acquisitions at double the rate compared to the prior version of the card, marking the most successful launch for a Platinum refresh in over a decade. The revamped card, introduced in September, now carries an annual fee of $895, reflecting a notable $200 increase. However, Squeri confirmed that retention rates among existing cardholders have remained stable following the refresh, with the fee hike not impacting them for several months.
The competitive landscape among luxury credit cards has intensified, as other financial institutions also raise their fees. Chase recently increased the annual fee for its Sapphire Reserve card, while Citi launched its Strata Elite card this summer. Despite the rising costs, Chase’s CFO Jeremy Barnum remarked that they are successfully attracting customers to their Sapphire product, which is experiencing its best year for new account acquisitions to date.
American Express’s Platinum card now offers a range of perks that appeal to consumers of all ages, particularly younger cohorts such as millennials and Gen Z. Squeri noted that these generations are particularly drawn to benefits related to wellness and entertainment. In fact, in the first quarter of the previous year, these younger consumers constituted an impressive 75% of new Platinum and Gold account sign-ups.
Furthermore, millennial and Gen Z cardholders on average completed around 25% more transactions than older customers, underscoring their growing significance to the company. American Express reported a staggering $421 billion in billed business during the third quarter, showcasing the robust performance of its product offerings. Following this promising financial outlook, the company’s stock appreciated by more than 7% by midday on the earnings call day.
