In the last five years alone, annual fees for The Platinum Card® from American Express have grown enormously. First there was a hike from $450 to $550 years ago, then it jumped even higher last summer all the way to its current $695 price tag (see rates & fees). Think it ends there? Think again.
Travelers with Platinum Cards in their wallets may groan, but investors likely love the message American Express CEO Steve Squeri delivered at an investor conference this week. Even at $695 a year, the bank keeps luring in new customers to its flagship travel card at record levels – especially millennials and Gen Zers. And so long as they can keep piling on new perks and benefits to the dizzying array of current credits for Uber, gym memberships, and CLEAR subscriptions, there's no reason they'll stop there.
“As far as how high it goes? Look, in Mexico, we charge $1,000 for the Platinum Card,” Squeri said during a 30-minute discussion at the Goldman Sachs U.S. Financial Services Conference on Tuesday. “The reality is, it'll go as high as the value allows us to go.”
Ouch. But travel is back, big time, and Amex has tripled down its focus on premium travel cards with eye-popping bonuses of 150,000 points and marketing campaigns to fuel the company's growth.
In the summer of 2021, Amex pushed the annual fee up to $695 a year while overhauling the card with a slew of new benefits: A $200 annual credit for prepaid hotel stays, up to $20 a month for select streaming and entertainment services, up to $300 a year toward pricy Equinox gym memberships, and more. Since then, the bank has added to the pile with additional credits that cover Walmart+ subscriptions and buying Soul Cycle bikes – or at least a small fraction of the price.
Goodbye, premium travel credit card – hello, premium lifestyle credit card. The result? Despite throngs of travelers swearing they'll cancel their Platinum Cards the moment it renewed at $695 a year starting in early 2022, Amex has seen several consecutive quarters of record new cardmember acquisition on both the Platinum Card and the American Express® Gold Card.
Consider this: Even after nearly $250 in hikes in annual fees, Squeri said the ranks of Platinum cardholders have doubled since the days of its $450 annual fee.
“Would it have doubled with a 695 fee if we hadn't valued the value? The answer is no. But we added the value,” Squeri said.
Of course, value is in the eye of the beholder: Not everyone will treasure getting $50 to shop at Saks Fifth Avenue twice a year. But more than any other bank hawking travel credit cards, Amex has an appetite for loading up its products with new perks in order to justify higher annual fees by sticking to the same basic script:
- They partner with companies like Equinox, Soul Cycle, and Walmart for sponsored benefits
- They've designed many of those credits to be harder to use, like $200 a year that only be used toward airline fees like seat assignment or luggage (though there are better ways to maximize Amex airline credits) and another $200 for Uber rides or Uber Eats … that reset 12 times a year.
With that approach, Amex ensures those flashy benefits will cost them a fraction of the sticker price, all while justifying higher annual fees in exchange. Sure, it's turned the Amex Platinum Card into a metal coupon book, but the numbers are undeniable: The strategy is working.
Many of those decisions are clearly rooted in Amex's goal of attracting the younger generations of heavy-spending, frequent-traveling Americans. And much to the chagrin of travelers who would rather see annual fees go down than up, Squeri said Amex has learned that they're more than willing to pay credit card annual fees.
“I think the big surprise here with millennials and Gen Z …. was that they'd be willing to pay a fee. Everybody used to attack this segment with a fee-free product,” Squeri said. “They're willing to pay for the service. They're willing to pay for the value. They're willing to pay for the experience. They're very discerning consumers.”
So when will the next round of new benefits and higher fees hit the Platinum Card? Squeri didn't exactly tip his hand … except to say that “doing product refreshes over time is non negotiable.”
“We'll continue to add rational value, we'll continue to add emotional value, we'll continue to add experiential value,” he said.
Bottom Line
So long as American Express can continue luring in new customers with flashy benefits and massive welcome bonuses – plus keep existing customers from canceling their cards via generous retention offers – higher annual fees on the Amex Platinum Card seem like a foregone conclusion.
It's a matter of when – not if.
I felt the $650 af on the Brilliance was a sign they will raise the af for the Platnium also. I don’t know how there younger folks are justifying the high af. but I have a feeling it has more to do with flexing that actually working that af off.
I think Amex is taking advantage of the inflation situation, they see that people are willing to pay for these extreme annual fees, little do they know us gen z humans are forced to pay these high prices for items. I’m a young student, looking at my outcomes for my next card but if Amex is looking to rise the Annual Fee it’s not looking good for these upcoming years. They definitely will not be “attracting the younger”
Time cancel the platinum card. A member since 82.
One said it best, it’s to flex. And with platinum giving a high limit, you’ll stay in their debt. And if you dont mind that, then more power to you. But I agree, the gen or millennial whatevers, take pride in flexing nowadays.