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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 co-brand 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