American Express New Cardholders Annual Fee
We cover American Express quite often here on Miles to Memories. Over the years they have won my loyalty with a variety of good products, a fairly easy approval process (for existing customers) and lucrative programs such as Amex Offers. Both my wife and I have multiple American Express credit and charge cards and we pay a decent amount in annual fees as well.
Apparently we aren’t alone! Bloomberg reports American Express CFO Jeff Campbell stated that roughly 70% of Amex’s new cardholders are signing up for products with an annual fee. Campbell said, “Nobody else in the industry really has value propositions that attract people that are willing to pay significant fees.”
The numbers seemingly back this up as well. Net card fees collected by American Express were $1.93 billion in the first half of 2019. That is significant and is probably driven by high annual fees on Platinum cards, which are somewhat offset by higher costs to Amex in the form of additional benefits they have had to offer to respond to the competitive landscape.
They Are Getting Tougher
Bloomberg also notes that American Express has tightened their credit standards in the wake of what they see as an upcoming economic downturn or at least the increased potential of one. So what does this all mean?
We have anecdotally seen a lot of changes from American Express over the past couple of years and this confirms some of them. American Express has added language that allows them to not pay a bonus for customers they deem as not eligible. Some customers get a popup telling them they aren’t eligible for a bonus when they apply. I suspect this behavior has saved Amex a lot of money.
Of course it is clear that American Express is also gaining a ton of customers who are also paying annual fees. Personally I think the aggressive marketing of their Platinum products including targeted Amex Platinum 100K offers is continuing to drive growth. In other words, people may be paying, but Amex is as well in the form of lucrative bonuses.
Let’s also not forget that American Express is extremely strong in the small business space. They provide a lot of value to small businesses through their various products and in return they often sell products with annual fees. My business has a Platinum card and I know a lot of small business owners that happily pay annual fees with Amex. With that said, my favorite Amex business card is the Blue Business Plus. No annual fee and 2X everywhere up to $50K in spend.
Should You Pay An Annual Fee?
I could go on and on about American Express, their product lineup and where/when it makes sense to pay an annual fee, however it really comes down to a few things.
- What value are you getting in return for your money?
- Now, look at that number again and be honest with yourself. What value are you REALLY getting in return for your money?
- Are the perks things you will use or do they just sound cool, but not realistic?
- What other cards do you have that give you similar perks or earning potential?
In the end it isn’t smart to pay an annual fee if you aren’t getting the value back in return. For me, the prestige of carrying around a Platinum or Gold Amex card isn’t worth me shelling out hundreds of dollars every year, however for some of their products I still do.
And yes, I have opened a new annual fee card this year, so I guess I am part of the 70%. Are you?