Amex Told Investors Platinum Is Its Fastest-Growing U.S. Card — But Benefit Costs Ballooned 50%

I receive compensation for content and many links on this blog. Be aware that websites may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened. Citibank is an advertising partner of this site, as is American Express, Chase, Capital One, and others. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all offers that are available -- instead focusing on miles, points, and cash back (and currencies that can be converted into the same). Terms apply to the offers and benefits listed on this page.American Express shared some incredible data during its second quarter earnings call. The American Express Platinum Card® see rates and fees is working, perhaps better than Amex expected. It is now their fastest-growing U.S. consumer card and it was the largest driver of their 11.4% U.S. consumer spending increase. Last year’s card refresh is reportedly producing: Higher spending by existing cardmembers. Significant new account growth. Upgrades to Platinum from other Amex products. Extremely high retention despite the $200 fee increase. More travel and dining engagement. Approximately one-quarter of U.S. Platinum accounts had received the $200 annaul fee increase from $695 to $895. Retention was flat year-over-year despite the fee increase and they describe that as “through the roof.” And Amex is highlighting for investors the growth in annual fee revenue they expect to see as the increased card costs rolls out to more customers. They’re calling the product their largest and fastest-growing U.S. card and the largest contributor to the acceleration in U.S. consumer spending, growing about 600 basis points following the refresh. Revenue at Amex is growing significantly, but earnings are not, and they took this objection head on. They can either have more earnings now or invest in the business with more card acquisition, doubling down on technology and integrating TheFork into their dining ecosystem which helps drive card adoption and spending and new agentic commerce initiatives. They think these will drive even more profit in the future. The current American Express Platinum Card® initial bonus offer is as high as 175,000 Membership Rewards points after $12,000 spend on eligible purchases on the card within the first 6 months. (They vary the offers, and not everyone is eligible.) That’s expensive, at a penny a point that would be $1,750 just in the bonus as part of their acquisition cost. They’re spending heavily and not just on bonuses. Total Amex expenses rose 12% against 10% revenue growth. Cardmember rewards were up 9% which is what you’d expect along with similar growth in spend. However ‘cardmember services’ were up a whopping 50% driven by new Platinum credits, services and benefit usage. While many of the credits are funded by their partners, that doesn’t come close to covering all of the cost. And remember that they own Resy, that rebate comes from their own pockets. Here are the details of just some of the American Express Platinum Card® credits totaling $1,919 – this isn’t the full list, and doesn’t include hotel status (Marriott, Hilton) or rentla car status let alone lounge access. $200 Uber Cash + $120 Uber One Credit With the Platinum Card® you can receive $15 in Uber Cash each month plus a bonus $20 in December when you add your Platinum Card® to your Uber account to use on rides and orders in the U.S when you select an Amex Card for your transaction. Plus, when you use the Platinum Card® to pay for an auto-renewing Uber One membership, you can get up to $120 in statement credits each calendar year. Terms apply. $300 Digital Entertainment Credit: Experience the latest shows, news and recipes. Get up to $25 in statement credits each month when you use your Platinum Card® for eligible purchases on Disney+, a Disney+ bundle, ESPN streaming services, Hulu, The New York Times, Paramount+, Peacock, The Wall Street Journal, YouTube Premium, and YouTube TV when you purchase directly from one or more of the providers. Enrollment required. $600 Hotel Credit: Get up to $300 in statement credits semi-annually on prepaid Fine Hotels + Resorts® or The Hotel Collection* bookings through American Express Travel® using the Platinum Card®. *The Hotel Collection requires a minimum two-night stay. $400 Resy Credit + Platinum Nights™ by Resy: Get up to $100 in statement credits each quarter when you use the Platinum Card® to pay for eligible purchases with Resy, including dining purchases at over 10,000 qualifying U.S. Resy restaurants. Enrollment required. As a Platinum Card® Member you have special access to reservations on select nights at participating sought after Resy restaurants in select cities through Platinum Nights™ by Resy. Simply add your Platinum Card® to your Resy profile to book your reservation. $219 CLEAR+ Credit: CLEAR+ helps get you to your gate faster by using your face to verify you are you at 55+ airports nationwide. You can cover the cost of a CLEAR+ Membership* with up to $219 in statement credits per calendar year after you pay for CLEAR+ with your Platinum Card®. *Excluding any applicable taxes and fees. Subject to auto-renewal. $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees, such as checked bags and in-flight refreshments, are charged by the airline to the Platinum Card® Account. American Express relies on airlines to submit the correct information on airline transactions to identify incidental fee purchases. If you do not see a credit for a qualifying incidental purchase on your eligible Card after 8 weeks, simply call the number on the back of your Card. Qualifying airlines are subject to change. See terms & conditions for more details. So you can see how it’s possible to bribe customers with thousands of dollars to pay an $895 annual fee. I get multiples of the annual fee back in statement credits, so it’s earning a profit and accessing Centurion lounges, at least if you don’t factor the time and brain space needed to take advantage of the benefits. Nonetheless, in addition to not actually growing earnings right away, investment analysts had questions around whether cardmembers would cancel as the new higher annual fee hits their account (though this hasn’t seemed to happen yet), whether Amex will ahve to keep refresh products and increasing benefits in order to sustain growth (probably, and remember that merchant-funded offers come and go as the partners achieve their objectives or decide it’s no longer worth funding). And there are questions around the return on Resy and Tock. Amex doesn’t view those as investments that are supposed to be profitbale in their own right, which is good, because giving cardmembers $400 a year to spend on Resy is almost insane and hard to imagine it’s sustainable. It keeps money in their ecosystem but in some sense what they’ve proven with Platinum is that you can give customers money and they’ll take your card. Spending growth at Resy restaurants was roughly twice the overall restaurant rate, and Amex says its cardmembers have higher restaurant checks than non-cardmembers. Give customers money to spend at specific restaurants and they will spend money at those specific restaurants. The real trick here seems to be that people seem to be getting the card and using it for other things – when the correct strategy is to use it for airfare purchases at 5 points per dollar, and use it where you’re earning statement credits, but little else because it makes absolutely no sense to earn just 1 point per dollar on your spending. Some other things I found interesting: Amex had the best spending growth in three years. There’s no slowdown in premium customer spend. 75% of their new accounts are on annual fee-paying products. That’s the highest share they’ve achieved in recent years. They added 3 million new cards during the quarter (not necessarily 3 million unique new customers). Amex assumes very little points breakage, with a redemption rate of ~ 96%. They did revise this down slightly but not enough to change the rounded rate, which suggests they goosed earnings a bit this quarter but they say it iwll be de minimis for the full year. About 10% of U.S. cardmembers now have an Amex deposit account. Consumer and small-business deposit balances rose 9%, and roughly 60% of consumer deposit accounts belong to Millennials or Gen Z. They’re trying to turn the card relationship into a broader banking relationship. As a reward for reading to the end, here are 23 Amex Platinum Insider Tips: Hidden Credits, Enrollment Traps, And Benefits Most Cardmembers Miss. For rates and fees of the American Express Platinum Card®, click here. Topics on this page Editorial note: any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Comments made in response to this post are not provided or commissioned nor have they been reviewed, approved, or otherwise endorsed by any bank. It is not the responsibility of advertisers Citibank, Chase, American Express, Barclays, Capital One or any other advertiser to ensure that questions are answered, either. Terms and limitations apply to all offers.