Latest news with #premiumcards
Washington Post
4 days ago
- Business
- Washington Post
Citi launches Strata Elite Card to compete with AmEx and Chase
NEW YORK — There's a new but familiar face coming to the world of high-end credit cards. Citigroup is launching the Strata Elite Card, the bank's latest attempt to grab a piece of the high-fee, high-rewards credit card market that's dominated by American Express' Platinum Card and JPMorgan Chase's Sapphire Reserve Card.
Yahoo
20-07-2025
- Business
- Yahoo
American Express just offered a rare peek inside the spending habits of wealthy Americans—all the way down to Gen Z
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. This story was originally featured on
Yahoo
18-07-2025
- Business
- Yahoo
American Express Beats Q2 Profit Forecast; Shrugs Off Rival Card Threats
American Express (AXP, Financials) reported better-than-expected second-quarter earnings Friday, with company leaders brushing aside worries about rising competition in the premium card space. Warning! GuruFocus has detected 5 Warning Signs with BZAI. The credit card business produced $4.08 per share in adjusted earnings, which was more than LSEG's average projection of $3.89. The company's revenue rose 9% from the previous year to $17.9 billion, which was a little more than were optimistic that the company's long-term focus on wealthy customers, which includes special benefits, restaurant booking services like Resy and Tock, and the next redesign of its Platinum card, will help it stay ahead. Christophe Le Caillec, the CFO, told Reuters that he was excited about the challenge from Citigroup's proposed "Citi Strata Elite" card. He claimed that clients will still choose AmEx when they compare since the company has assets that its competitors don't Express still depends on its high-end offerings, which focus on experiences and exclusivity rather than simple payback advantages. Experts think that this plan has helped the business get a lot of customers that other businesses would like to have. Stephen Squeri, the CEO, said that people kept spending the same amount of money, even when the economy was awful. Rich people with cards kept traveling and spending. However, AmEx did raise its credit loss reserve to $1.4 billion and noted that spending on airlines was still though AmEx's shares did better than expected, they fell more than 3% on the day. This year, they have gone up 6.3%, which is less than the 7% gain of the S&P 500. The corporation kept to its projection for 2025 that earnings per share would be between $15 and $15.50 and that sales would climb by 8% to 10%. This article first appeared on GuruFocus.
Yahoo
18-07-2025
- Business
- Yahoo
American Express Beats Q2 Profit Forecast; Shrugs Off Rival Card Threats
American Express (AXP, Financials) reported better-than-expected second-quarter earnings Friday, with company leaders brushing aside worries about rising competition in the premium card space. Warning! GuruFocus has detected 5 Warning Signs with BZAI. The credit card business produced $4.08 per share in adjusted earnings, which was more than LSEG's average projection of $3.89. The company's revenue rose 9% from the previous year to $17.9 billion, which was a little more than were optimistic that the company's long-term focus on wealthy customers, which includes special benefits, restaurant booking services like Resy and Tock, and the next redesign of its Platinum card, will help it stay ahead. Christophe Le Caillec, the CFO, told Reuters that he was excited about the challenge from Citigroup's proposed "Citi Strata Elite" card. He claimed that clients will still choose AmEx when they compare since the company has assets that its competitors don't Express still depends on its high-end offerings, which focus on experiences and exclusivity rather than simple payback advantages. Experts think that this plan has helped the business get a lot of customers that other businesses would like to have. Stephen Squeri, the CEO, said that people kept spending the same amount of money, even when the economy was awful. Rich people with cards kept traveling and spending. However, AmEx did raise its credit loss reserve to $1.4 billion and noted that spending on airlines was still though AmEx's shares did better than expected, they fell more than 3% on the day. This year, they have gone up 6.3%, which is less than the 7% gain of the S&P 500. The corporation kept to its projection for 2025 that earnings per share would be between $15 and $15.50 and that sales would climb by 8% to 10%. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-06-2025
- Business
- Yahoo
JPMorgan, Amex flash new cards
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. American Express and JPMorgan Chase are ramping up their competition for upscale cardholders. JPMorgan fired the opening salvo when it teased a refresh of its Sapphire Reserve credit card last week on its Instagram page. Amex then touted major changes coming later this year to its Platinum cards via a Monday press release. On Tuesday, as JPMorgan unveiled hundreds of dollars worth of new perks and pricing for its premium Sapphire Reserve card, the bank said it would hike annual fees for the card by 45% to $795. The Amex Platinum card currently has an annual fee of $695. The American Express Platinum card and the Sapphire Reserve card are both geared to higher-income consumers. Both charge hefty annual fees, but provide perks like dining and travel credits or priority reservations at exclusive restaurants. Amex dominated the premium card network until Chase launched the Sapphire Reserve card in 2016. The American Express card refresh was likely in the works for months before the card network's Monday news release, TD Cowen analyst Moshe Orenbuch said in an interview. But the timing of the company's initial announcement, just days after JPMorgan's Instagram post, was likely not a coincidence, Orenbuch said. "There's a definite competitive dynamic going on there," Orenbuch said. Amex's news release amounted to an announcement for an announcement planned later this year, giving very little new information and saying more details would come. 'I would say that maybe they rushed that announcement,' Orenbuch suggested. Although he stressed that Amex does not appear to be rushing the refresh itself. 'These are not things you can do by flipping a switch,' he said. An American Express spokesperson declined to comment on the timing of its release or say precisely when the card network will provide more information on the refresh. Amex and JPMorgan aren't just competing with each other when they update their premium cards, said Tony DeSanctis, senior director of payments for the consulting firm Cornerstone Advisors. 'They're also thinking about buy now, pay later,' he said in an interview. American Express has openly courted members of Gen Z, who are increasingly using BNPL, he noted, and the perks on premium cards must appeal to members of that demographic who are looking for alternatives to credit cards. JPMorgan's Instagram marketing post was light on details until the company sent out a news release announcing the new fees and perks on Tuesday. The list of new perks for the Sapphire Reserve card include a $500 annual credit at certain hotels and resorts and a $300 credit at restaurants that are part of the Sapphire Reserve's dining program. It remains to be seen what new perks Amex will offer cardholders, but the company said the forthcoming changes would represent its largest ever investment in a card refresh. That likely means bigger annual fees and more perks, Orenbuch said. 'This is not just about raising the price,' he said. 'You have to provide significantly more value than the increase in price to the consumer.' Recommended Reading Amex, Fiserv cite inflation benefit
