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How deeply loyal Platinum Card holders really are, and other Amex news

by on Thu March 26, 2015 • No Comment

Yesterday, American Express offered an in depth presentation for investors.

There were a few nuggets of information for rewards seekers, but perhaps the most surprising is this statement:

“Our share of wallet among Platinum Cardmembers is 70% and among Gold Cardmembers is 55%.”

That means people who hold a Platinum Card put 70% of their spending on it, an astonishingly high number.

That’s despite the fact it’s a basic 1 point per dollar card.

There are no category bonuses, and no extra bonuses for spending more on the card each year, unless you have one of the special brokerage branded versions.

If you’re truly rational about rewards, you shouldn’t be putting any spending on your Platinum Card, and instead use a more rewarding Membership Rewards card like the no annual fee Amex EveryDay, which can offer 1.2 points per dollar on most spending and 2x points on groceries.

It’s possible some of them are putting their spending on another American Express card, but people who hold more than 2 rewards cards are in the distinct minority. But most of them are pulling out their Platinum Card for just about everything.

If you’re reading this, you are a value seeker, and you should thank these loyal Platinum Card holders.

While putting 70% of your spend on a Platinum Card makes little sense if you’re trying to maximize your rewards, it does make sense in another way.

The annual fee is big, and the card still carries prestige in people’s minds. A lot of cardmembers think they need to ‘earn back’ their annual fee by using the card. Some are even afraid if they stop spending they might lose it.

And the perception that the Platinum Card is exclusive makes many people more likely to pull out the card simply for the prestige factor. While best in class purchase protection and claim management is another reason cardholders tend to pull out their Platinum Cards more often.

It’s powerful, and their loyalty subsidizes the great Amex benefits for you, a more savvy reward seeker.

Other notes…

  • Amex wouldn’t confirm any more than 2 additional lounge openings this year, which are the previously announced Miami Centurion Lounge and Seattle Studio Centurion Lounge. Both will be open by mid year. But there was no sign of pulling back or closing existing clubs.
  • Amex highlighted that changes (previously announced) are coming to the Premier Rewards Gold card, but did not make mention of Platinum Card changes. We think any coming changes to the Platinum Card will involve more marginal benefits, rather than any big change to earning potential.
  • Amex says EveryDay cardholders are 2x more likely to carry a revolving debt balance each month. Which is good for Amex, but bad for those cardholders. In fact, EveryDay cardholders are spending 50% more on their cards than standard Amex card holders. Basically, the idea of offering consumers the incentive of earning more by using the card many times each month is appealing to people who carry high interest credit card debt. No rewards are worth carrying a card balance month to month with an interest rate of 12.99% or higher.
  • Avios and Amex will stay together. British Airways and Iberia relationships were just renewed, which includes cards Amex issues in the UK and Europe, but also includes the Membership Rewards relationship.
  • Management is happy with the Starwood and Delta partnerships and will introduce new offers. They said Starwood ‘clearly’ understands the value of the Amex ‘closed loop’ of data and some yet to be announced offers Amex is planning for Starwood members. It appears these offers and benefits will be targeted based on a member’s profile.
  • Delta and Amex have renewed for 7 years total. So don’t expect much change to those basic card offerings, though Amex is pushing for more data driven benefits and offers.


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