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American Express losing Costco set off a chain reaction that rocked the credit card world. American Express moved quickly to re-up their co-brand deal with Delta (which was second largest to Costco, Starwood is third). They set a new high price benchmark, that defined terms for Chase renewing United and Southwest and ultimately led to expected higher revenue from a new Citibank-Barclaycard deal with American Airlines.
American Express went from figuring out how to grow post-Costco, to cost-cutting, to investing in products and cardmember acquisition again.
Meanwhile Chase got aggressive bringing back the 50,000 point bonus for the Chase Sapphire Preferred Card, introducing the premium $450 annual fee Chase Sapphire Reserve Card (in contrast, Sapphire Preferred is $0 the first year then $95). And introducing the Chase Ink Business Preferred Card which lets you earn an 80,000 point signup bonus.
The American Express Platinum Card now lets you earn a 60,000 point signup bonus, comes with an Uber credit up to $200 in value each year, and is produced as a metal card — on top of existing club lounge access and elite status benefits.
Citi likely overpaid to be able to offer their strong new Costco Anywhere Visa. American Express wouldn’t match the deal, which made sense but set off a new level of competition and laid bare the issuer’s own weaknesses.
In a New York Times piece on Friday about American Express brand positioning weakness with affluent millennials — suggesting that American Express has married itself to the kind of consumption versus experiences that millennials don’t relate to (that millennials prefer the humble brag to conspicuous consumption) — some interesting data points about the American Express and Chase card businesses are shared.
- American Express has more than 109 million cardholders
- The number of Amex cards in use “declined by almost 18 percent” last year. Ouch. Of course just over half that should be accounted for by losing Costco.
- American Express revenue is off $2 billion compared to 2014.
- Over 1 million people have signed up for the new Chase Sapphire Reserve Card