October 17, 2025 • 19 mins
The competition for America’s wealthiest shoppers is heating up, with credit card companies like American Express and Chase using every perk in the book to enroll new cardholders.
On today’s Big Take podcast, Bloomberg’s Amanda Mull tracks how the leading credit card companies are using perks, promotions and points to win the business of the 10 percent of Americans responsible for nearly 50 percent of the country’s discretionary spending. Who will win this high-stakes game – and what’s the cost to the rest of us?
Read more:
- Inside the Credit Card Battle to Win America’s Richest Shoppers
- Take Bloomberg’s Quiz: Which Premium Credit Card Is Right For You?
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
Fall is in full swing in New York. The temperature
is dropping, the leaves are changing. But cast your mind
back with me for a minute to the dog days
of summer and one of its biggest sporting events at
the US Open. The adrenaline of New York just gets
going for some of the players. This year, Carlos Alcaraz
defeated his rival Yannick Sinner to claim the title of
(00:31):
men's singles champion. Arena Sablenka won her second straight title
on the women's side. Bloomberg's Amanda Male was there, but
not just for tennis.
Speaker 3 (00:42):
It's a tennis competition, but it's also in some instances
in Olympics of luxury branding.
Speaker 2 (00:48):
Amanda has been following a different kind of match, the
one between luxury credit cards. For years, American Express and
Chase have been vying to be the preferred premium credit
card of America's richest consumers, and at the US Open,
they were pulling out all the stops.
Speaker 3 (01:06):
What both of the banks had done was sort of
set up a series of spaces, lounges, terraces, places that
you could grab refreshments, get a free hairtie and some
free sunscreen, and you were able to access different versions
of those spaces or different types of them, depending on
your status as a cardholder or like what kind of
(01:27):
card you held within the company's selection.
Speaker 2 (01:31):
These card companies aren't just duking it out on the
sidelines of tennis matches. From exclusive fashion Week events to
bespoke airport lounges and partnerships with brands like Lululemon, Chase, MX,
and a handful of competitors are doing whatever it takes
to convince a specific group of high earners to do
their swiping with them.
Speaker 3 (01:52):
If you look at the highest earning ten percent of households,
which is roughly households above two hundred and fifty thousand
dollars a year, they do half of all of the
consumer spending in the United States. It's a third of
American GDP. It is an enormous amount of day to
day spending.
Speaker 2 (02:09):
These wealthy Americans have helped make premium credit cards the
fastest growing sector of the card industry, and they're paying
between four hundred and nearly nine hundred dollars a year
in annual fees to the credit card companies that offer them.
So what's the endgame here and who's winning. I'm Sarah Holder,
(02:31):
and this is the big take from Bloomberg News today
on the show Premium credit Cards Hit the Court, how
the leading credit card companies are pushing for an advantage
point with America's top spenders game set match. It tracks
(02:51):
that the people spending the most money in the American
economy are the people with the most money.
Speaker 3 (02:57):
It's always been the case that the people do a
disproportionate amount of consumer spending because the more discretionary income
you have above and beyond your basic needs, the more
opportunities you have to do discretionary spending.
Speaker 2 (03:10):
But Bloomberg BusinessWeek reporter Amanda Mall says, over the past
few decades, the gap between the consumer spending of the
wealthiest ten percent of Americans and the rest of the
country has been widening.
Speaker 3 (03:22):
A big reason that consumer spending has gotten more disproportionate
is that as wages have stagnated, and more recently, as
like the job market has sort of frozen, so it's
really hard to leave or find a new job. What
has gone up in value is assets. If you own stocks,
if you own real estate, if you own anything that
appreciates you are probably feeling a lot more flush than
(03:45):
someone who makes like a similar amount of money to you,
perhaps but does not have those investments. So the people
who own assets, they are sort of running away with
the economy at this point.
Speaker 2 (03:56):
And as those top earners become an increasingly powerful spending block,
credit card companies have been eager to woo them.
Speaker 3 (04:05):
You want to be in business with this particular customer,
because the main way that credit cards make money, that
they generate revenue is through interchange fees.
Speaker 2 (04:14):
Every time a customer swipes, the credit card company pockets
a percentage of the total transaction. The higher the transaction,
the more companies make.
Speaker 3 (04:24):
So putting a lot of effort and capital and time
and energy into figuring out what those people want, where
they are, and how they can be motivated is really
really huge for brands.
Speaker 2 (04:36):
One of the ways credit card companies have targeted those
big swipers is by offering a product they pitch as
a premium credit card, which offers extra perks in exchange
for an annual fee.
Speaker 3 (04:49):
You saw really the first flurry of activity in premium
rewards credit cards in the nineteen eighties. That is, you know,
the Yuppi era, the greatest Good era of the final
guys in Armani suits. This is a time when like
this sort of consumer culture of the US was beginning
to shift to cater itself more to like very high earners.
(05:10):
And in nineteen eighty four, AMX came out with its
first Platinum card. It was at the time and invite
only credit card, so it was for a very small
percentage of very high earners that already had relationships with MX.
But over time, as credit cards became an even more
dominant form of payment within the US, as they became
more widely accepted and safer to use, American Express and
(05:33):
its competitors all sort of expanded those programs. The Platinum
card eventually became available for open application. It's still a
little hard to get. You have to be high income
and have very good credit. Those programs began to be
more widely pitched. As this disparity in discretionary spending grew.
Speaker 2 (05:52):
So the number of elite spenders grew and the way
that credit card companies were marketing their premium offerings expanded
as well. Yes, for a long time, American Express dominated
the premium market.
Speaker 3 (06:08):
American Express has been set up to service the needs
of high earners since like the eighteen nineties when they
came out with their first travelers checks. Other banks had
other premium credit cards, especially when banks started to partner
with airlines to help administer frequent flyer rewards programs, but
it was always sort of an article of faith that
this was like sort of American Express's market. And then
(06:30):
in the mid twenty tens, American Express went through some
changes with its business. It lost its partnership with Costco,
which accounted for fully like one in ten of American
Express cards in circulation in the United States at the time.
Speaker 2 (06:44):
Costco executives felt amex's transaction fees were too high, so
when their credit card agreement was up for negotiation in
twenty fifteen, the two companies parted ways.
Speaker 3 (06:57):
Visa gave them a better deal on interchange fees, so
they switched to Visa, and that, you know, created some
turmoil within AMX, and they decided that they were going
to double down and go all in on really pursuing
these affluent to wealthy customers that have always been their
sort of bread and butter. But before they could get
(07:18):
some new upgrades out to their Platinum card. In fallow
twenty sixteen, Chase came to market with the Chase Sapphire Reserve.
At the time it had a four hundred and fifty
dollars fee that has since been increased several times. It
is now seven ninety five. And Chase really saw Amex
as vulnerable at that time. They looked at this company
that was, you know, servicing a really desirable segment of
(07:39):
the public, and went, maybe we can do that better
if we have the right combination of amenities in fees
and perks and things that we can offer. And Chase
is a part of JP Morgan Chase. It is a
huge company that has like the financial resources to do
all kinds of things that like virtually no other financial
institution in the US as the resources to do.
Speaker 2 (08:00):
The rollout costs two hundred to three hundred million dollars.
Chase was ready to play.
Speaker 3 (08:06):
They said, well, why can't we beat AMEX at its
own game? And then AMX of course fired back.
Speaker 2 (08:13):
In twenty seventeen, AMX tacked on a two hundred dollars
a year Uber credit and invitation to a pop up
restaurant in the Hampton's and five times points for flights
and hotel states.
Speaker 3 (08:24):
And these cards get a refresh every three to five
years usually, so we've been in sort of a cycle
of refreshing and competition ever since.
Speaker 2 (08:35):
And that brings us to today when MX and Chase
are still kind of jockeying for the top billing in
the premium credit card space. Walk me through the pitch
that these two credit card companies are making. How are
they getting people to sign up for the Chase Platinum
Reserve and not the other guy?
Speaker 3 (08:52):
Well, it's funny, Like I do think it gets confusing,
Like I mean, you said yourself, the Chase Platinum Reserve,
Like it's the AMEX the platform, and it's the Chase
Sapphire Reserve.
Speaker 2 (09:02):
Okay, got it, Chase Sapphire Reserve, Amex Platinum card.
Speaker 3 (09:08):
Credit card branding is very confusing because like the fundamental
problem of the credit card space is that, like the
day to day process of using a credit card is
exactly the same no matter what card you're using. You
take it out of your wallet, you tap it, you
swipe it. So credit card issuers need you to use
their card versus all of the other ones in your wallet,
and these companies, by their very nature have a lot
(09:29):
of consumer data, so they can see what their high
income clients do with their money and like what they prefer,
the kinds of brands they shop from their leisure activities.
Speaker 2 (09:38):
So they end up offering a lot of similar perks.
Speaker 3 (09:43):
Airport lounges, free upgrades to nicer seats on an airplane,
first DIBs on restaurant reservations, retail or brand purchase credits.
So spend money at Lululemon and quarterly you get a
seventy five dollars refund.
Speaker 2 (09:58):
All these different cards, it's all these similar perks. How
is someone supposed to choose what card to get?
Speaker 3 (10:05):
It's like very difficult because like not only do American
Express and Chase have their own sort of like mainline
premium cards, but they both co brand cards, as every
card company does with hotel chains, with airlines, like Chase
has its United cards, MX says it's Delta cards. It
sort of depends on like like what your actual spending
habits are and if you can sort of evaluate them dispassionately.
Speaker 2 (10:29):
Charlotte Zolar is one card holder who's trying to make
that calculus for herself.
Speaker 1 (10:34):
Right now, I feel like I'm getting my money's worth,
and at the same time, I feel like I am
working to make that happen. I'm now tracking to make
sure I use all of my perks.
Speaker 2 (10:48):
Charlotte first signed up for an MX Platinum card in
twenty twenty one. She was starting to make more money
and she wanted to go out to eat at nicer
restaurants travel better. But last year, Charlotte decided to give
the Chase Sapphire Reserve a try.
Speaker 1 (11:03):
MX's lounges have gone downhill significantly. The perks of the
hotel program have kept me there, but the points also
have don't stack up as well as Chases.
Speaker 2 (11:19):
Charlotte is now weighing whether she should keep paying for
both cards, which cost her more than twelve hundred a
year combined, or commit to just one.
Speaker 1 (11:28):
It makes me feel a little bit silly, honestly paying
for both. I've gotten into a frustrating place because I
like how the Venn diagram of perks shifts into cocentric
circles when I have both cards.
Speaker 2 (11:43):
Charlotte's dilemma speaks to a bigger issue for these credit
card companies, as more of them offer premium cards with
similar perks. It's getting harder and more expensive to differentiate themselves.
That's after the break. American Express and Chase have slightly
(12:07):
different motives when it comes to recruiting high income customers.
MX's business is based around finding and keeping premium card holders,
and the company says it has a ninety eight percent
retention rate. Chase wants those same premium card holders, but
it's also hoping to convert them into JP Morgan banking clients.
(12:28):
And nearly a decade after these credit card companies started competing,
BusinessWeek reporter Amanda Mole has been trying to figure out
whether their strategies have been paying off.
Speaker 3 (12:38):
Chase confirmed to me that, like the Sapphire Reserve, is
profitable unto itself, profitable even if cardholders don't go into
any of their other financial services offerings, even if they
don't take out a mortgage with Chase, even if they
don't do wealth management with Chase, And like in general,
AMEX really only offers premium cards. They don't really do
much of a business in lower credit quality, lower income
(12:59):
client But like they're a very profitable company, there is
a real business case for spending all of this money
and all of this time and investing all of this
capital in attracting these consumers because they do such a
disproportionate amount of spending in the US. Like it nets out,
the ROI is good, but what.
Speaker 2 (13:17):
Works in the US hasn't translated to other parts of
the world.
Speaker 3 (13:21):
Part of what makes the math on this work for
card issuers is that in the United States there is
not any cap on interchange fees. You don't get a
lot of these cards in Europe because Europe regulates how
large of a percentage of each transaction that card companies
can take. America caps that for debit cards, but not
for credit cards. So the premium cards, even within the
(13:44):
same issuer, they command a higher interchange fee. It can
get up to like three percent to five percent, depending
on what card you're looking at and what type of
transaction it is in the size. So it's these transactions
that are sort of underwriting these benefits. If you cap
them as most other markets do, like the math doesn't
work out as well.
Speaker 2 (14:04):
MX recently announced that its Platinum Cards annual fee would
go up two hundred dollars a year to eight hundred
and ninety five dollars, and the Chase Sapphire Reserves fee
just went up two hundred and forty five a year
to seven hundred and ninety five dollars. Part of the
reason for the fee hikes, Amanda says, is this fear
that the US could begin capping fees.
Speaker 3 (14:26):
I think banks have been nervous for years that there
is going to be regulatory action on interchange fees in
the US, and there has been a lot of threat
that regulatory bodies are going to sort of like come
in and reduce the amount that these cards can charge.
The odds of that happening during like a Trump administration
are I think somewhat muted. But like banks look at
(14:48):
this as sort of a long term project.
Speaker 2 (14:50):
That's really interesting. So if they have to charge less
per transaction at a grocery store or a corner store,
they're going to make up that money by charging these
elite spenders more each year.
Speaker 3 (15:04):
That's part of it, definitely is the anticipation that you
need to train cardholders to expect a highee, because you
may need one in order to make the card business
solvent in the future at some point. But then there's
also I think a desire to like thin the herd
a little bit. I heard this from a few people
within the industry. Banks who are providing all these perks
wants you to pick. They don't want you to have
(15:25):
both cards and sort of like gain max value out
of those cards and then move on to the next
card and extract value from that. They want you to say, Okay,
if it's going to cost me a thousand dollars, I'm
just going to get the platinum or the Sapphire reserve
and be done with it. Because this is it's too much,
it's too annoying.
Speaker 2 (15:43):
I'm wondering whether these cards actually make economic sense for
most consumers. Are they getting their money's worth out of
these perks If you're paying basically one thousand dollars a
year for a credit card.
Speaker 3 (15:55):
Well, I think for most consumers they don't make sense.
And I think that the banks themselves would tell you
that this is like not a card for everybody. They
want like a particular psychograph of consumer to sign up
for these cards.
Speaker 2 (16:05):
For these particular kinds of customers, paying for a premium
can be worth it, despite the cost or because of it.
Speaker 3 (16:14):
These cards are absolutely status symbols. There's a reason that
they're all made of metal. Now they have a nice
like plunk when you put them down on a table
in a restaurant. It has always been true that charging
more for something, if it's the right type of something,
if you've communicated about it correctly to your customer, charging
more for something can make it itself more valuable. The
US open sponsorship, the airport lounges, partnerships with like luxury
(16:38):
hotels and getting you into first class and an airplane.
That is all designed not just to woo customers, but
to also burnish the reputation of these cards as luxury
goods themselves.
Speaker 2 (16:50):
So in the premium credit card matchup, who's winning, Amanda
says figuring that out is not as straightforward as tallying
up points. Neither company discloses figures on how many premium
card holders they've enrolled.
Speaker 3 (17:05):
There has been some math done out there that among
American Expresses Delta cards it seems like there is about
six to eight million holders of those cards, if you
know the co branded card is bringing in that many people.
Then across the lineup there is the mainline platinum, and
then it chased, there is the preferred preferred business, and
American Express also does a platinum business like it is
(17:29):
like millions and millions of people this summer. When Chase
launched their refresh of the Chase Sapphire Reserve card, there
was like a real sense of like, oh, like Chase
is very very serious. Chase is maybe like making a
real dent in this. And Chase told me that they
believe that they are winning this war for America's wealthy consumers.
(17:51):
But the Amex launch in September that came a few
months after the Chase relaunch has been received like really
really well. They have such a long history with this.
They just have a real head start in a lot
of the categories that make a real difference to this
type of shopper. So Chase is investing an enormous amount
of capital in catching up. But I think they're still
(18:13):
catching up.
Speaker 2 (18:14):
They're both bringing their metal credit cards to the knife fight.
We'll see how it ends.
Speaker 3 (18:20):
Thanks so much, Amanda, of course, thank you.
Speaker 2 (18:27):
This is the Big Take from Bloomberg News. I'm Sarah Holder.
The show is hosted by Me, David Gura, wan Ha
and Seleiah Mosen. The show is made by Aaron Edwards,
David Fox, Eleanor Harrison Dengate, Patti hirsh Rachel Lewis Krisky,
Naomi In, Julia Press, Tracy Samuelson, Naomi Shavin, Alex Sugia,
(18:48):
Julia Weaver, Yang Yong and Taka Yasuzawa. To get more
from the Big Take and unlimited access to all of
Bloomberg dot Com, subscribe today at Bloomberg dot Com Slash
Podcast to offer thanks for listening. We'll be back on
Monday m HM
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
Fall is in full swing in New York. The temperature
is dropping, the leaves are changing. But cast your mind
back with me for a minute to the dog days
of summer and one of its biggest sporting events at
the US Open. The adrenaline of New York just gets
going for some of the players. This year, Carlos Alcaraz
defeated his rival Yannick Sinner to claim the title of
(00:31):
men's singles champion. Arena Sablenka won her second straight title
on the women's side. Bloomberg's Amanda Male was there, but
not just for tennis.
Speaker 3 (00:42):
It's a tennis competition, but it's also in some instances
in Olympics of luxury branding.
Speaker 2 (00:48):
Amanda has been following a different kind of match, the
one between luxury credit cards. For years, American Express and
Chase have been vying to be the preferred premium credit
card of America's richest consumers, and at the US Open,
they were pulling out all the stops.
Speaker 3 (01:06):
What both of the banks had done was sort of
set up a series of spaces, lounges, terraces, places that
you could grab refreshments, get a free hairtie and some
free sunscreen, and you were able to access different versions
of those spaces or different types of them, depending on
your status as a cardholder or like what kind of
(01:27):
card you held within the company's selection.
Speaker 2 (01:31):
These card companies aren't just duking it out on the
sidelines of tennis matches. From exclusive fashion Week events to
bespoke airport lounges and partnerships with brands like Lululemon, Chase, MX,
and a handful of competitors are doing whatever it takes
to convince a specific group of high earners to do
their swiping with them.
Speaker 3 (01:52):
If you look at the highest earning ten percent of households,
which is roughly households above two hundred and fifty thousand
dollars a year, they do half of all of the
consumer spending in the United States. It's a third of
American GDP. It is an enormous amount of day to
day spending.
Speaker 2 (02:09):
These wealthy Americans have helped make premium credit cards the
fastest growing sector of the card industry, and they're paying
between four hundred and nearly nine hundred dollars a year
in annual fees to the credit card companies that offer them.
So what's the endgame here and who's winning. I'm Sarah Holder,
(02:31):
and this is the big take from Bloomberg News today
on the show Premium credit Cards Hit the Court, how
the leading credit card companies are pushing for an advantage
point with America's top spenders game set match. It tracks
(02:51):
that the people spending the most money in the American
economy are the people with the most money.
Speaker 3 (02:57):
It's always been the case that the people do a
disproportionate amount of consumer spending because the more discretionary income
you have above and beyond your basic needs, the more
opportunities you have to do discretionary spending.
Speaker 2 (03:10):
But Bloomberg BusinessWeek reporter Amanda Mall says, over the past
few decades, the gap between the consumer spending of the
wealthiest ten percent of Americans and the rest of the
country has been widening.
Speaker 3 (03:22):
A big reason that consumer spending has gotten more disproportionate
is that as wages have stagnated, and more recently, as
like the job market has sort of frozen, so it's
really hard to leave or find a new job. What
has gone up in value is assets. If you own stocks,
if you own real estate, if you own anything that
appreciates you are probably feeling a lot more flush than
(03:45):
someone who makes like a similar amount of money to you,
perhaps but does not have those investments. So the people
who own assets, they are sort of running away with
the economy at this point.
Speaker 2 (03:56):
And as those top earners become an increasingly powerful spending block,
credit card companies have been eager to woo them.
Speaker 3 (04:05):
You want to be in business with this particular customer,
because the main way that credit cards make money, that
they generate revenue is through interchange fees.
Speaker 2 (04:14):
Every time a customer swipes, the credit card company pockets
a percentage of the total transaction. The higher the transaction,
the more companies make.
Speaker 3 (04:24):
So putting a lot of effort and capital and time
and energy into figuring out what those people want, where
they are, and how they can be motivated is really
really huge for brands.
Speaker 2 (04:36):
One of the ways credit card companies have targeted those
big swipers is by offering a product they pitch as
a premium credit card, which offers extra perks in exchange
for an annual fee.
Speaker 3 (04:49):
You saw really the first flurry of activity in premium
rewards credit cards in the nineteen eighties. That is, you know,
the Yuppi era, the greatest Good era of the final
guys in Armani suits. This is a time when like
this sort of consumer culture of the US was beginning
to shift to cater itself more to like very high earners.
(05:10):
And in nineteen eighty four, AMX came out with its
first Platinum card. It was at the time and invite
only credit card, so it was for a very small
percentage of very high earners that already had relationships with MX.
But over time, as credit cards became an even more
dominant form of payment within the US, as they became
more widely accepted and safer to use, American Express and
(05:33):
its competitors all sort of expanded those programs. The Platinum
card eventually became available for open application. It's still a
little hard to get. You have to be high income
and have very good credit. Those programs began to be
more widely pitched. As this disparity in discretionary spending grew.
Speaker 2 (05:52):
So the number of elite spenders grew and the way
that credit card companies were marketing their premium offerings expanded
as well. Yes, for a long time, American Express dominated
the premium market.
Speaker 3 (06:08):
American Express has been set up to service the needs
of high earners since like the eighteen nineties when they
came out with their first travelers checks. Other banks had
other premium credit cards, especially when banks started to partner
with airlines to help administer frequent flyer rewards programs, but
it was always sort of an article of faith that
this was like sort of American Express's market. And then
(06:30):
in the mid twenty tens, American Express went through some
changes with its business. It lost its partnership with Costco,
which accounted for fully like one in ten of American
Express cards in circulation in the United States at the time.
Speaker 2 (06:44):
Costco executives felt amex's transaction fees were too high, so
when their credit card agreement was up for negotiation in
twenty fifteen, the two companies parted ways.
Speaker 3 (06:57):
Visa gave them a better deal on interchange fees, so
they switched to Visa, and that, you know, created some
turmoil within AMX, and they decided that they were going
to double down and go all in on really pursuing
these affluent to wealthy customers that have always been their
sort of bread and butter. But before they could get
(07:18):
some new upgrades out to their Platinum card. In fallow
twenty sixteen, Chase came to market with the Chase Sapphire Reserve.
At the time it had a four hundred and fifty
dollars fee that has since been increased several times. It
is now seven ninety five. And Chase really saw Amex
as vulnerable at that time. They looked at this company
that was, you know, servicing a really desirable segment of
(07:39):
the public, and went, maybe we can do that better
if we have the right combination of amenities in fees
and perks and things that we can offer. And Chase
is a part of JP Morgan Chase. It is a
huge company that has like the financial resources to do
all kinds of things that like virtually no other financial
institution in the US as the resources to do.
Speaker 2 (08:00):
The rollout costs two hundred to three hundred million dollars.
Chase was ready to play.
Speaker 3 (08:06):
They said, well, why can't we beat AMEX at its
own game? And then AMX of course fired back.
Speaker 2 (08:13):
In twenty seventeen, AMX tacked on a two hundred dollars
a year Uber credit and invitation to a pop up
restaurant in the Hampton's and five times points for flights
and hotel states.
Speaker 3 (08:24):
And these cards get a refresh every three to five
years usually, so we've been in sort of a cycle
of refreshing and competition ever since.
Speaker 2 (08:35):
And that brings us to today when MX and Chase
are still kind of jockeying for the top billing in
the premium credit card space. Walk me through the pitch
that these two credit card companies are making. How are
they getting people to sign up for the Chase Platinum
Reserve and not the other guy?
Speaker 3 (08:52):
Well, it's funny, Like I do think it gets confusing,
Like I mean, you said yourself, the Chase Platinum Reserve,
Like it's the AMEX the platform, and it's the Chase
Sapphire Reserve.
Speaker 2 (09:02):
Okay, got it, Chase Sapphire Reserve, Amex Platinum card.
Speaker 3 (09:08):
Credit card branding is very confusing because like the fundamental
problem of the credit card space is that, like the
day to day process of using a credit card is
exactly the same no matter what card you're using. You
take it out of your wallet, you tap it, you
swipe it. So credit card issuers need you to use
their card versus all of the other ones in your wallet,
and these companies, by their very nature have a lot
(09:29):
of consumer data, so they can see what their high
income clients do with their money and like what they prefer,
the kinds of brands they shop from their leisure activities.
Speaker 2 (09:38):
So they end up offering a lot of similar perks.
Speaker 3 (09:43):
Airport lounges, free upgrades to nicer seats on an airplane,
first DIBs on restaurant reservations, retail or brand purchase credits.
So spend money at Lululemon and quarterly you get a
seventy five dollars refund.
Speaker 2 (09:58):
All these different cards, it's all these similar perks. How
is someone supposed to choose what card to get?
Speaker 3 (10:05):
It's like very difficult because like not only do American
Express and Chase have their own sort of like mainline
premium cards, but they both co brand cards, as every
card company does with hotel chains, with airlines, like Chase
has its United cards, MX says it's Delta cards. It
sort of depends on like like what your actual spending
habits are and if you can sort of evaluate them dispassionately.
Speaker 2 (10:29):
Charlotte Zolar is one card holder who's trying to make
that calculus for herself.
Speaker 1 (10:34):
Right now, I feel like I'm getting my money's worth,
and at the same time, I feel like I am
working to make that happen. I'm now tracking to make
sure I use all of my perks.
Speaker 2 (10:48):
Charlotte first signed up for an MX Platinum card in
twenty twenty one. She was starting to make more money
and she wanted to go out to eat at nicer
restaurants travel better. But last year, Charlotte decided to give
the Chase Sapphire Reserve a try.
Speaker 1 (11:03):
MX's lounges have gone downhill significantly. The perks of the
hotel program have kept me there, but the points also
have don't stack up as well as Chases.
Speaker 2 (11:19):
Charlotte is now weighing whether she should keep paying for
both cards, which cost her more than twelve hundred a
year combined, or commit to just one.
Speaker 1 (11:28):
It makes me feel a little bit silly, honestly paying
for both. I've gotten into a frustrating place because I
like how the Venn diagram of perks shifts into cocentric
circles when I have both cards.
Speaker 2 (11:43):
Charlotte's dilemma speaks to a bigger issue for these credit
card companies, as more of them offer premium cards with
similar perks. It's getting harder and more expensive to differentiate themselves.
That's after the break. American Express and Chase have slightly
(12:07):
different motives when it comes to recruiting high income customers.
MX's business is based around finding and keeping premium card holders,
and the company says it has a ninety eight percent
retention rate. Chase wants those same premium card holders, but
it's also hoping to convert them into JP Morgan banking clients.
(12:28):
And nearly a decade after these credit card companies started competing,
BusinessWeek reporter Amanda Mole has been trying to figure out
whether their strategies have been paying off.
Speaker 3 (12:38):
Chase confirmed to me that, like the Sapphire Reserve, is
profitable unto itself, profitable even if cardholders don't go into
any of their other financial services offerings, even if they
don't take out a mortgage with Chase, even if they
don't do wealth management with Chase, And like in general,
AMEX really only offers premium cards. They don't really do
much of a business in lower credit quality, lower income
(12:59):
client But like they're a very profitable company, there is
a real business case for spending all of this money
and all of this time and investing all of this
capital in attracting these consumers because they do such a
disproportionate amount of spending in the US. Like it nets out,
the ROI is good, but what.
Speaker 2 (13:17):
Works in the US hasn't translated to other parts of
the world.
Speaker 3 (13:21):
Part of what makes the math on this work for
card issuers is that in the United States there is
not any cap on interchange fees. You don't get a
lot of these cards in Europe because Europe regulates how
large of a percentage of each transaction that card companies
can take. America caps that for debit cards, but not
for credit cards. So the premium cards, even within the
(13:44):
same issuer, they command a higher interchange fee. It can
get up to like three percent to five percent, depending
on what card you're looking at and what type of
transaction it is in the size. So it's these transactions
that are sort of underwriting these benefits. If you cap
them as most other markets do, like the math doesn't
work out as well.
Speaker 2 (14:04):
MX recently announced that its Platinum Cards annual fee would
go up two hundred dollars a year to eight hundred
and ninety five dollars, and the Chase Sapphire Reserves fee
just went up two hundred and forty five a year
to seven hundred and ninety five dollars. Part of the
reason for the fee hikes, Amanda says, is this fear
that the US could begin capping fees.
Speaker 3 (14:26):
I think banks have been nervous for years that there
is going to be regulatory action on interchange fees in
the US, and there has been a lot of threat
that regulatory bodies are going to sort of like come
in and reduce the amount that these cards can charge.
The odds of that happening during like a Trump administration
are I think somewhat muted. But like banks look at
(14:48):
this as sort of a long term project.
Speaker 2 (14:50):
That's really interesting. So if they have to charge less
per transaction at a grocery store or a corner store,
they're going to make up that money by charging these
elite spenders more each year.
Speaker 3 (15:04):
That's part of it, definitely is the anticipation that you
need to train cardholders to expect a highee, because you
may need one in order to make the card business
solvent in the future at some point. But then there's
also I think a desire to like thin the herd
a little bit. I heard this from a few people
within the industry. Banks who are providing all these perks
wants you to pick. They don't want you to have
(15:25):
both cards and sort of like gain max value out
of those cards and then move on to the next
card and extract value from that. They want you to say, Okay,
if it's going to cost me a thousand dollars, I'm
just going to get the platinum or the Sapphire reserve
and be done with it. Because this is it's too much,
it's too annoying.
Speaker 2 (15:43):
I'm wondering whether these cards actually make economic sense for
most consumers. Are they getting their money's worth out of
these perks If you're paying basically one thousand dollars a
year for a credit card.
Speaker 3 (15:55):
Well, I think for most consumers they don't make sense.
And I think that the banks themselves would tell you
that this is like not a card for everybody. They
want like a particular psychograph of consumer to sign up
for these cards.
Speaker 2 (16:05):
For these particular kinds of customers, paying for a premium
can be worth it, despite the cost or because of it.
Speaker 3 (16:14):
These cards are absolutely status symbols. There's a reason that
they're all made of metal. Now they have a nice
like plunk when you put them down on a table
in a restaurant. It has always been true that charging
more for something, if it's the right type of something,
if you've communicated about it correctly to your customer, charging
more for something can make it itself more valuable. The
US open sponsorship, the airport lounges, partnerships with like luxury
(16:38):
hotels and getting you into first class and an airplane.
That is all designed not just to woo customers, but
to also burnish the reputation of these cards as luxury
goods themselves.
Speaker 2 (16:50):
So in the premium credit card matchup, who's winning, Amanda
says figuring that out is not as straightforward as tallying
up points. Neither company discloses figures on how many premium
card holders they've enrolled.
Speaker 3 (17:05):
There has been some math done out there that among
American Expresses Delta cards it seems like there is about
six to eight million holders of those cards, if you
know the co branded card is bringing in that many people.
Then across the lineup there is the mainline platinum, and
then it chased, there is the preferred preferred business, and
American Express also does a platinum business like it is
(17:29):
like millions and millions of people this summer. When Chase
launched their refresh of the Chase Sapphire Reserve card, there
was like a real sense of like, oh, like Chase
is very very serious. Chase is maybe like making a
real dent in this. And Chase told me that they
believe that they are winning this war for America's wealthy consumers.
(17:51):
But the Amex launch in September that came a few
months after the Chase relaunch has been received like really
really well. They have such a long history with this.
They just have a real head start in a lot
of the categories that make a real difference to this
type of shopper. So Chase is investing an enormous amount
of capital in catching up. But I think they're still
(18:13):
catching up.
Speaker 2 (18:14):
They're both bringing their metal credit cards to the knife fight.
We'll see how it ends.
Speaker 3 (18:20):
Thanks so much, Amanda, of course, thank you.
Speaker 2 (18:27):
This is the Big Take from Bloomberg News. I'm Sarah Holder.
The show is hosted by Me, David Gura, wan Ha
and Seleiah Mosen. The show is made by Aaron Edwards,
David Fox, Eleanor Harrison Dengate, Patti hirsh Rachel Lewis Krisky,
Naomi In, Julia Press, Tracy Samuelson, Naomi Shavin, Alex Sugia,
(18:48):
Julia Weaver, Yang Yong and Taka Yasuzawa. To get more
from the Big Take and unlimited access to all of
Bloomberg dot Com, subscribe today at Bloomberg dot Com Slash
Podcast to offer thanks for listening. We'll be back on
Monday m HM
Hosts And Creators
Sarah Holder
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