American Express just offered a rare peek inside the spending habits of wealthy Americans—all the way down to Gen Z

Yahoo

20-07-2025

When American Express unveiled its second-quarter 2025 results on Friday, it didn't just announce another round of record-breaking earnings. It offered a rare, high-definition snapshot of how affluent Americans, the premium cardholders at the heart of its business, are faring in a constantly shifting economic landscape. The short answer? Quite well, really.
American Express reported record quarterly revenue of $17.9 billion, up 9% year-over-year, as well as total Card Member spending that surged 7% over the same period in 2024 to a new high of $416.3 billion. The company's business model, which heavily skews toward a more affluent customer base, renders these numbers a kind of barometer for upper-income Americans' financial confidence and willingness to spend.
Not only are these card members spending more, but they're also showing a renewed appetite for premium products and experiences. Critics have long claimed the 'premium card' phenomenon to be cyclical or overhyped, but American Express is plowing forward with more bells and whistles for its affluent customers.
This leads to a significant caveat: expenses rose 14% year-over-year, as the company reinvested in technology and expanded risk management. It also cited 'higher variable customer engagement costs driven by increased Card Member spending and usage of travel-related benefits,' meaning that the bells and whistles that come with the premium cards are so enticing they're chipping away at Amex's margin somewhat. Still, the card issuer reaffirmed its outlook 8%–10% revenue growth and full-year earnings per share of $15-$15.50.
On the conference call with analysts after the release of its earnings, company management dug into this dynamic, with momentum especially strong among millennials and Gen Z who are embracing the brand's luxury value proposition. They want what the premium cards offer, in other words.
Despite strong earnings, the share price, which hit a record high earlier in the month, fell 2.6% in afternoon trading. Truist Securities analyst Brian Foran commented in a research note that 'some investors have moved to a 'being good is not good enough' mindset.' It also suggests that all the perks that come with these premium cards may be attractive for members, but the rising cost of servicing them has the Street worried about how much Amex is betting on its affluent customer base.
Trends in generational wealth
Millennial spending rose 10%, while Gen Z cardholders grew their spend at a somewhat astonishing 40% (albeit from a smaller base). This generational shift bodes well for the premium space: not only older, established wealth but younger, upwardly mobile clients are embracing the brand's luxury value proposition.
And these new members seem to be using their cards—a lot. Net card fees rocketed up 20% year-over-year (FX-adjusted), reinforcing that more users are opting into premium experiences. Card fee revenues have more than doubled since 2019, with recent refreshes on Gold, Delta, and Hilton cards spurring double-digit account growth and 98% retention. CFO Christophe Le Caillec said this validates the firms' strategy of 'first acquiring new customers onto fee-based products, then driving strong retention of our customer base, and finally, increasing value through product refreshes and pricing accordingly.'
To this point, the company is preparing a significant refresh of its U.S. Consumer and Business Platinum Cards this fall—bolstering the luxury perks and rewards that millionaire millennials and aspiring Gen Zers crave. Also, the launch of the new Coinbase One Card on the Amex network adds a crypto-forward wrinkle, aimed at younger, high-earning professionals seeking digital assets. Amex is confident it has a 'long runway for growth' as the premium segment continues to expand.
Credit performance 'best in class'
Spending is robust, but so is the financial health of Amex's clientele. The company boasted the lowest projected credit card loss rate and the highest projected return on assets in the Federal Reserve's 2025 stress tests—a testament to the resilience and stability of its cardholders even in theoretical economic downturns.
For the second quarter, Amex's net write-off rate inched lower to 2.0% (from 2.1% a year ago), meaning bad debts that are uncollectible. It also said overall credit performance remains 'best in class.' These are other ways of saying that the overwhelming majority of customers are not only spending—they're also reliably paying their bills.
This goes for the younger card members, too. Lakayak noted on the call that the delinquency rates for U. S. millennial and Gen Z customers aren't just better than the industry average for those age groups, but they're also 'nearly 40% better than the industry average for older age groups.'
Comments on the call also extended to the fact that the premium American Express card is offering too much of a good thing, as its airport lounges deal with access and overcrowding issues. There are just too many affluent cardholders who want the lounge experience before they fly. 'We're trying to make the lounges bigger,' CEO Steve Squeri said in response to a question from an analyst. He also said they have to get 'innovative' because the lounges are just so popular, citing a 'sidecar' arrangement they used in the Las Vegas airport, 'which is a more of a small kind of, I don't know, maybe call it a speakeasy kind of of lounge, where if you just want to go in for a quick drink or grab something quickly, you can do that.'
The record revenue—and climbing expenses—indicate this will be popular for some time to come. A long runway, indeed.
American Express declined to comment.
Correction: This article was updated to correct the spelling, attributable to human error, of American Express' CFO last name, which is Le Caillec.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
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