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American Express Announces Changes for Platinum Customers

American Express (NYSE:AXP) announced some major changes to its luxury credit card – The Platinum Card® from American Express. Effective October 6th, cardholders will earn 5 Membership Rewards (MR) points per dollar on airfare booked directly with airlines or through American Express Travel. This is a big jump from the card’s prior offering, which gave users just 1x points on these types of purchases.

The company teased at further improvements to the card’s benefits in the near future. In the company's press release, Denise Pickett, president of U.S. consumer services for American Express, said, “You’ll see further enhancements for Platinum and Business Platinum Card Members and new programs that leverage the expanded network of small business merchants.”

The improvements are best for business customers. Those with The Business Platinum® Card from American Express who redeem their MR points through Amex's portal on flights will receive a 50% points dividend. This effectively boosts the value of their MR points to roughly $0.015. Business owners who use the card to make purchases over $5,000 will earn 1.5x points on the transaction. As a result of all these changes, the Business card’s rewards rate will climb up to 3% on travel booked through Amextravel.com, 2.25% on purchases over $5,000 and 1.5% in other categories.

Analysts have anticipated this announcement ever since the launch of Chase’s popular Chase Sapphire Reserve®. In August, JPMorgan Chase entered the premium credit card market that has long been Amex’s domain. The Chase Sapphire Reserve® was wildly successful and received mass media attention. Chase officials announced the bank ran out of cards due to the high volume of applications they received.

Despite these changes, Amex won't successfully dethrone the Chase Sapphire Reserve®. Amex’s new offer is enough to beat the Chase card on a single front – booking airline tickets. The Platinum Card® from American Express will have a 5% rewards rate on airfare booked with airlines, compared to the 4.5% on the Chase Sapphire Reserve®. However, the Chase card takes that 4.5% rewards rate and extends it to the broad “travel” category, not just direct airfare bookings. That means cardholders can enjoy above-average returns on hotels, car rentals and other modes of transport. The Platinum Card® from American Express retains a measly 1% back in these categories. Additionally, the Chase Sapphire Reserve® comes with a significantly better sign-up bonus and annual travel credit. Amex's latest update has not done enough to address these points.

The Platinum cards have long been the flagship product for the company and have attracted high net worth members. These big spenders have historically been good performers for Amex, helping them drive their high discount revenue. As new players enter the field, the company will use moves like this to try and maintain customer loyalty and prevent cardholders from jumping ship.

A bar graph showing different rewards rate for direct airfare purchases among different premium credit cards.

American Express has been recovering since its messy divorce with Costco and JetBlue. The former made up 8% of Amex's global 2015 billed business. The loss of these two major co-branded relationship from their portfolio had an impact on the company's discount revenue – that is the revenue from merchant fees. According to their quarterly earnings report, part of the loss has been offset by the increase in cardmember fees collected, which has been “primarily driven by growth in the Platinum, Gold and Delta portfolios.” With this latest announcement, it seems American Express is doubling down on what has been working for them in the past. In Q2 of 2016, discount revenue was down $122M for the company year over year, while net card fees revenue was up $48M.

Comments and Questions

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Info about the following cards: Premier Rewards Gold Card from American Express, Hilton Honors Surpass® Credit Card, American Express® Blue Sky, American Express® Green Card, The Amex EveryDay® Preferred Credit Card from American Express, The Amex EveryDay® Credit Card from American Express, The Plenti® Credit Card from Amex, Blue from American Express®, Platinum Card® from American Express Exclusively for Mercedes-Benz, Bluebird, Centurion® Card from American Express, Hilton Honors American Express Aspire Card, Starwood Preferred Guest® American Express Luxury Card, Amazon Business American Express Card, and Marriott Bonvoy Brilliant™ American Express® Card has been collected independently by ValuePenguin. The issuer did not provide the details, nor is it responsible for their accuracy.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates are ValuePenguin's alone and for illustrative purposes only. The estimates are not a guarantee, agreement, or commitment to redemption amounts and may not have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred® Card points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).

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