Signals: Chase and Amex are raising annual fees on their premium credit cards. Are they still worth it?

If there was ever a single credit card to rule them all, it might feel like a distant memory now. Bygone are the days of credit simplicity — just swipe, pay off, and take the crumbs of cashback along the way. These days, there’s a card for everything and everybody: 3% cashback on this, 5x points on that, a lounge in your local airport. And increasingly, it’s not just plastic mounting in wallets; it’s metal, too.

In recent years, highfalutin ‘premium’ ‘travel’ cards like the American Express Platinum Card and Chase Sapphire Reserve have upped the ante with steeper annual fees, the promise of bigger and better airport lounges, and almost ‘too many to count’ credits and benefits in tow. Some creditors have followed in their footsteps, looking to tap the seemingly infinite amount of fee revenue exuding from the mass affluent.

But increasingly, the threat of higher fees and ‘more benefits that nobody can use’ is being met with frustration. Cardholders who have been particularly resolute in the face of higher and higher annual fees are claiming — although I’m not sure that I believe them — that they have had enough. I’m not sure Amex, Chase, or other financial institutions believe them either.

Travel has become cheaper, more accessible, and undeniably vogue; so too have other lifestyle pursuits. Young people (really, anybody under the age of 65) love dining out, shopping new-agey experiences, and living in glossy new build apartments. Life is their moodboard. At the center of all of those spendy experiences is a credit card.

The star of the show, at least recently, has been American Express. Leaning into the ‘main character energy’ of America’s young people, their cards have become something of a status symbol; although it might be in dispute how much ‘auramaxxing’ there is to acquire from the arrogance of using an Amex Platinum card at dinner.

That’s because, fundamentally, the Amex Platinum is not a great credit card to spend on.

At 1x points on the vast majority of purchases, it’s really quite disappointing, even within the Amex family. But American Express knows that. What cardholders are getting isn’t necessarily more Membership Rewards (MR) points, but the biblical sign-up bonuses (in some cases, up to 175,000 points, as of late) and the well-rounded ecosystem of credits and features that come with the company’s $695/yr card.

What does that mean? Well, the word you’ll hear thrown around a lot — not just by Amex — is “value.” It’s the bedrock on which Amex, arguably the inventor of the “coupon book” (as it has come to be affectionately, or not so affectionately referred to), has based its innumerable annual fee hikes. 

Over the years, it has become a way of life for premium cardholders — the way to recoup that $695/yr annual fee card in your wallet. What started with airline lounge access has now evolved into a robust list of credits to earn. And in some cases, it’s a way to more than exceed the dues that you pay on your card.

And this year, controversially, American Express is seeking to hike the annual fee on their flagship card again. With it, the coupon book will lengthen. They are not alone.

You might wonder why credit cards — including maybe, some of your favorites — have been making big changes. There’s a lot of reasons, a big take away is that they’re doing this because they can.

In Q2, American Express reported a 20% year-over-year increase in card fee revenue, a byproduct of raising annual fees on credit cards and retaining customers. Other creditors have taken note. If Amex is able to successfully convince people to shell out for plastic — or metal, depending on how premium you get — then surely they can do the same, right?

Turns out, they're not alone. CompoSecure, which manufactures the majority of the world's 'premium credit cards' have a lot to say in this regard. You can see the growth in their quarterly report, which shows the rising number of new card accounts since 2020 at the three largest creditors:

Digging in further, the company increasingly tasked with etching your name into metal credit and debit cards is producing billions of cards. And as a result of premium card demand – especially from those more expensive 'metal' cards – they are reporting record sales. 

In fact, non-GAAP net sales were up 10%. They raised their annual guidance. (I looked for some more insights on the premium cardholders from their IR team; they did not respond to comment.)

And so it stands to reason that if people are still opening premium credit cards, no matter the perceived ridiculousness of spending hundreds of dollars per year to earn back the annual fee in small bite-sized credits, then the ridiculousness must continue. 

But this time around, specifically with bank-branded premium travel cards, things are shaping up a little differently.

In the past, higher fees have been justified by tossing some new benefits on your card here and there. Amex slices up credits across its cards with partners like Clear, Uber, Equinox, and entertainment vendors like Hulu. This is a portion, albeit not the entirety, of how Amex justifies its $695/yr Platinum Card. (And to a lesser degree, it's $325/yr Amex Gold card.)

Many of these external credits are presented at value, but in many cases, the perks are acquired by the bank at a discount, according to Matthew Goldman, Publisher of CardsFTW and Founder of Totavi, LLC. In fact, partners are glad to sell ‘credits’ to card issuers, since these ‘bulk buys’ for all credit card holders drive spending activity from new and returning customers.

Chase took after this model in refreshing its flagship Chase Sapphire Reserve (CSR) Card. It now wields a much longer list of credits from external partners — like StubHub, DoorDash, Lyft, Peloton, and Apple TV & Music — which help to to excuse the higher, $795/yr annual fee.

However, all of the new credits overshadow a shift away from partnerships and towards creditors’ own marketplaces.

Months before the CSR overhaul entered chat, Amex had begun flirting with what its own card makeovers might look like — starting with its Gold Card. It had taken the time-tested tradition of raising annual fees and showering users in new perks. But, unlike in the past, the largest ‘add’ of all was a $100 Resy credit, which could be used semi-annually.

This was notable because, up to that point, the Amex Gold card was effectively powered by outside partnerships; that $10/mo Uber Cash, the $10/mo “Dining Credit” that could be used at a few eligible places. That’s what made the $250/yr card kinda worth it. But to justify the higher, $325/yr annual fee, Amex had to throw cardmembers a new “valued” bone. 

It looked within to find it. Amex bought Resy in 2019 and hadn’t done a whole lot with it outside of cutesy perks like “exclusive dining experiences” and “hard-to-get reservations.” Obviously, the business served an important role in Amex’s connection to its ‘small business’ image.” (shit that nobody actually ends up using outside of maybe, I don’t know, the five markets where such a thing actually is purported to exist.)

This point was only furthered in October when Amex dropped a cool $400 million to acquire Tock, looking to expand its restaurant network. It took this a step further in recent weeks after partnering with Toast.

It turns out that the Amex Gold wasn't the only place that the Resy credit would land. In its refresh of Delta's various Amex-branded cards, Amex added Resy credits of varying quantity to the airline's various cards. The top of the line cards included a $120 or $240 Resy Credit, which could be earned monthly.

These changes foreshadowed where the long tail of ‘premium cards’ are going. Sure, there will still be partners who sell Amex and Chase some services at a discount to score a recurrent base of affluent customers. But they’ve signaled that their real goal is to find that value within their own ecosystem. 

Chase’s recent CSR changes only further the case that creditors are focused on their own services to improve the “value” of their cards. It’s obvious in the new 8x earning rate on Chase’s travel portal, the new $500/yr credit for “The Edit” luxury hotel collection on Chase Travel, and the $300/yr in statement credits on “Sapphire Reserve Exclusive Tables”, which are product of OpenTable (a division of Chase.)

And based on some leaks, we now know that the American Express Platinum Card refresh is going to see a $300/bi-annual credit for the company's Fine Hotels & Resorts. That'll likely be used to rationalize the $895/yr annual fee that has been thrown around by some of the industry's watchful eyes.

We did a small survey of TWIF readers. We found that the majority of respondents say they use “Most” of the credits on their premium credit cards, while a smaller percentage said they use “Some” of them. 

Worth noting: There is some inherent response bias in a survey like this; maybe the reason why people use most of the credits is because they’re the kinds of folks to respond to random, unpaid surveys in a newsletter. (Thanks to those of you who did, obviously.)

Almost all respondents indicated that cashback is the most important element of a credit card, especially on a premium card. Respondents praised airport lounge access, credits for Global Entry/TSA Precheck/Clear, and airline fee credits. However, those who did respond had more mixed viewpoints of entertainment, lifestyle, dining, and hotel credits.

Surely, one factor weighing on the popularity of those benefits is how easy they are to use — or how frequently they have to be used. Tike Anazodo, CEO of Kudos, shared some insights on the utilization of various credit card credits. 

Atop the utilization list was Chase’s $300 Annual Travel Credit, which they call the ‘easiest’ travel credit to use. The utilization by Kudos users seems to support that; a supermajority of users had already cashed in their credit in recent months.

However, Amex’s $300/yr in Equinox credit and $200/yr in airline incidentals came dead last in utilization, used by just a single-digit percent of Kudos users. Really, it was eye-opening to see just how few people were using their benefits on a month-to-month basis (even big ones!)

That shows that many cardholders are already struggling to stay on top of their various credits and benefits. Now, we have new ones at Chase and plenty more coming from Amex. And mind you, even though Amex is likely dropping a few credits — like the two aforementioned and the $100/yr Saks Fifth Avenue credit — it’s likely that they’ll put a greater emphasis on Resy, the Amex Travel portal, and new partners.

All that to say, credit card companies yearn for the coupon book because many cardholders don’t use all of the benefits. It’s more bucks in the bank for them; new hoops to jump through for you. 

Ultimately, it all goes to the goal of making you spend more money to earn so-called “luxury benefits" like additional lounge guests, airline/hotel status, or unlockable credits tied to spending requirements. It’s one of the false pretenses of mass affluence; you can’t possibly offer truly exclusive features on a card that is widely available.

Among those who responded to our cute lil’ survey, the overwhelming majority said that they would renew their primary premium credit card this year. Many indicated they get good value out of their cards, which is great. Many respondents are making the most of that annual fee and earning above and beyond what it has to offer — thank you to creditors for providing “value.” 

However, respondents (and really, everybody I’ve talked to) are a little more on the fence about whether or not they’ll renew if their primary card sees an annual fee increase. Obviously, we’ve already seen that with the CSR. Among our respondents, the majority of them said they would not keep (or get) that card based on the recent hike.

We’ll have to see how this shapes up for Amex as they prepare to unveil changes to the Amex Platinum, their first overhaul since 2021. In the last few weeks, we've heard that it's likely the annual fee will land just shy of $1,000. New credits for the Amex Travel portal have also cropped up in the terms and conditions, offering fleeting glimpses of the new credits, all adding more opportunities to unlock (or lose) value.

If you’re working in fintech or an institution, you’ve likely already clued in on much of what is going on right now in premium and ‘specialized’ card land. Amex and Chase have proven that the coupon book model and higher fees can be tolerated. As more banks take note of the money that can be captured from annual fees, we can expect to see new entrants in this space.

As a rule of thumb, they will likely be one or the other — either following Amex and Chase down Coupon Court or seeking to capture a begrudged affluent public seeking a third option. In short, here are a few names to keep an eye on:

On the other hand, you have banks that are visibly positioning for those who are all coupon book’d out; tired of steeper annual fees. They reckon there will be enough people frustrated by the recent changes to CSR, and forthcoming ones to Amex Plat, that they might be able to score some of the folks cleaving themselves from these relationships. 

Bilt is top of mind as one of those firms that seems to be squarely in the ‘Amex and Chase’ camp. A few months back, they sent out a survey to cardholders seeking feedback on Bilt 2.0. They sought to understand what earning rates, categories, and credits would be most compelling for its current $0 annual fee card, as well as two new products at $95/yr and $550/yr.

It remains to be seen what results come out of that survey, but what they were considering was not at all optimistic; fee credits for “Fitness” spending, Walgreens, and the Bilt travel portal.

Bilt did not respond to my request to comment. 

Citi seems to be leaning into this as well with their new Strata Elite card, looking to take on the Amex Platinum with a $575/yr annual fee. They return it to cardholders through $300 in annual hotel credits, $200 in “splurge” credits at brands like Best Buy, and a few free American Airlines lounge passes per year. 

$575/yr is going to be cheaper than Chase and Amex’s flagship. And bonus points: they have far less credits to keep track of, which could score them some points with folks who are seeking an alternative to the coupon book kings. However, Citi is not in lounge land and seems to have no plans outside of offering Priority Pass and those few Admiral Lounge passes.

Bank of America’s Premium Rewards Elite Credit Card has been on the market for awhile and it’s even simpler than Citi’s new Strata entry, with a $550/yr annual fee and $570/yr in automatic statement credits. I’m not sure it makes a lot of sense for them to toy with this product too much, since part of the elegance is that ardent depositors at the bank are earning even better cash back rates on purchases and get a sweet discount on airfare when they cash out points.

Capital One already has a premium card that stands apart from Chase and Amex’s respective flagship products. Their Venture X card is a cool $395/yr and comes with $300/yr travel credit in their Capital One Travel portal, plus $100 in points you earn every anniversary after you score a sweet sign-up bonus.

They would be an undeniable beneficiary of an exodus from the coupon craze. They have made things simple and are likely the best option for the kind of folks that don’t want to be spreadsheeting their various credits. However, they don’t have as robust a lounge network as Amex and seem to share equal footing with Chase as it expands.

Something I’m really curious to see is how Wells Fargo approaches credit cards after Bilt heads out. Bilt is arguably one of their flagship card products, but really, they don’t have any “premium” cards. 8 of their 11 cards are totally free; the most expensive it gets is $95/yr. 

I’m not sure that this is an area they’re going to kick around in, but knowing that, the Autograph Journey Card is a surprisingly elegant option I don’t see talked about. 5x points with hotels, 4x points with airlines, and 3x points on restaurants and other travel? That certainly puts many“travel cards” to shame, let alone premium cards, if I dare say so. Mind you, you’re going to get back more than half of the annual fee by simply making a $50 airline purchase. 

There’s probably some other institutions making a move on the premium or specialized credit card market, all with their own angle and attack. Since it’s not possible for me to cover all of them, I figured I’d shortlist a few more:

We reckon this story is a work in progress. That said, we’re curious to hear from you, the TWIF public: