AXP - American Express

[vinod1]

The process must be easier if you do it online and already have other Citi cards (not visa cards).  We got ours, registered them online and they were automatically linked to our other citi card and there was certainly no phone call involved.  I guess some people just want to use the phone...

 

I saw that story.  Pretty interesting.  Personally, I got my cards last week and activated and wife used earlier this week without incident.  The cash back rewards are better.  Do these people not have other Visa cards?

 

I registered online as well, but it is not linked to the Citi card I already have with them.

 

Vinod

[gfp]

My Mother said the same thing - it didn't give her the option to link it up.  I guess I just got lucky or the web browser was already signed in or something.  Who knows.  Is there a reason to use the new costco credit card at all except for Gas?  I'm planning to use mine for all gasoline but beyond that I don't see the appeal of trapping rewards over at costco.  We spend a lot on credit cards because my wife buys a lot of building materials and we have found the Chase Sapphire Preferred and Barclaycard arrival+ to be really nice cards for rewards.  On the Chase card, a real person - in the USA no less  - picks up the phone on the second ring every time I call.  It still takes me by surprise.  Love it.

[bookie71]

My Mother said the same thing - it didn't give her the option to link it up.  I guess I just got lucky or the web browser was already signed in or something.  Who knows.  Is there a reason to use the new costco credit card at all except for Gas?  I'm planning to use mine for all gasoline but beyond that I don't see the appeal of trapping rewards over at costco.  We spend a lot on credit cards because my wife buys a lot of building materials and we have found the Chase Sapphire Preferred and Barclaycard arrival+ to be really nice cards for rewards.  On the Chase card, a real person - in the USA no less  - picks up the phone on the second ring every time I call.  It still takes me by surprise.  Love it.

You don't have to spend the rebate at Costco, you can cash it out, which is what I usually do.

[gfp]

I get the reward in cash each year as well.  Credit card rewards just aren't as potent when you get cash.  I can use various "points" systems more intelligently and receive far more than the cash value by transferring them for 'miles' with United or Southwest or redeeming as travel statement credits with Barclays.  I've paid particular attention this past 12 months and it's absurd how much value I've received for "free" from CC rewards programs (all without paying a penny of interest or fees).  The other two I use: Amazon Prime Store card through Synchrony gives 5% back on every purchase (Amazon only), same as the Lowe's card through Synchrony.

[krazeenyc]

I mentioned a while back that I felt one of AXP's biggest risks is C and JPM's willingness to be promotional to pick up market share in the affluent credit card market -- one thing that we're starting to see is (I'm assuming) that it's not so easy to offer these premium cards profitably.

 

For example Citi offered the "Prestige" card with a $450 Annual Fee that offered incredibly benefits.  This was one of the best, if not the best widely available consumer card in the market for high spenders/business travelers. Unfortunately for consumers CITI is gutting the benefits...

 

1) $3k spend for 50K pts bonus is now $4K spend for 40K pts.

2) AA lounge access eliminated.

3) 1.6 cents per point redemption on AA flights downgraded to 1.25 cents per pt

4) 3 free rounds of golf GONE.

[TwoCitiesCapital]

http://www.bloomberg.com/news/articles/2016-06-23/costco-citi-deluged-by-complaints-in-rocky-credit-card-rollout

 

schadenfreude

 

More of it

 

http://finance.yahoo.com/news/costcos-credit-card-nightmare-just-151800610.html

 

I mentioned a while back that I felt one of AXP's biggest risks is C and JPM's willingness to be promotional to pick up market share in the affluent credit card market -- one thing that we're starting to see is (I'm assuming) that it's not so easy to offer these premium cards profitably.

 

For example Citi offered the "Prestige" card with a $450 Annual Fee that offered incredibly benefits.  This was one of the best, if not the best widely available consumer card in the market for high spenders/business travelers. Unfortunately for consumers CITI is gutting the benefits...

 

1) $3k spend for 50K pts bonus is now $4K spend for 40K pts.

2) AA lounge access eliminated.

3) 1.6 cents per point redemption on AA flights downgraded to 1.25 cents per pt

4) 3 free rounds of golf GONE.

 

Curious. I wasn't aware of the cut in benefits/rewards for the Citi prestige. We'll see if JPM follows suit with their new Sapphire Reserve.

[HJ]

http://www.bloomberg.com/news/features/2016-09-22/how-chase-made-the-perfect-high-for-credit-card-junkies

 

This one's going right at AXP.

[TwoCitiesCapital]

http://www.bloomberg.com/news/features/2016-09-22/how-chase-made-the-perfect-high-for-credit-card-junkies

 

This one's going right at AXP.

 

I am waiting to see if they cut the benefits like Citi Prestige has (twice!). Users who sign up today can get the 100,000 travel points (good for $1,500 on their travel portal) and $600 in travel credit ($300 between now and December and another $300 reset in January). So basically, you pay $450 and you get $2,100 in rewards for Chase while Chase accrues something like $100 in interchange fees on your 4k of spend. That means Chase will lose $1,200 - 1,500 on each card that is canceled in March/April for the people who only signed up for the 100k travel points (like myself).

 

My guess is that in 6 months time they'll cut the sign-up bonus and reduce some rewards once they get an idea of what sustainable demand and revenues are.

 

While it is likely the first credit card to go viral, it's not that much different from the AmEx platinum in it's offering. The main differences are highlighted below.

 

(Chase/AmEx respectively)

 

1. Sign up bonus 100k for 4k spend vs 40k for 3k spend

2. Access to lounges (Priority Pass vs Priority Pass/Centurion/Delta)

3. Transfer points 1:1 with 8 travel partners vs variable rate of transfer with 20 travel partners

4. $300 in travel reimbursement for anything travel related vs $250 in travel reimbursement for tickets, drinks on flight, and checked baggage

5. 2-3x point accruals for travel & dining vs 2x point accrual for travel through AmEx portal

 

If Chase cuts it's sign up bonus, I'd actually argue that the Platinum is still the better card with a lower spending hurdle, larger access to lounges (many of which are free), and a wider array of transfer partners which allows you to arbitrage the best deal since it's not a locked in transfer rate with each.

 

What it really come down to is how much "work" users want to put into their rewards. For users who just want to use the card and simply accrue points , the Chase card will be preferred. For those who don't mind doing a little work to be advantageous and maximize their rewards, the AmEx card can surpass the Chase card by far. For example,

 

I saved $450 on the purchase of some jewelry simply by choosing a store that had a deal with AmEx

I transferred my some AmEx points to Jet Blue at an advantageous exchange rate to multiply the value by 3-4x

I received $90 off when I purchased shoes from Allen Edmonds

I used my automatic Hilton Gold status to get a free night at the Hilton in Toronto

I received free Uber rides home from the airport around the holidays (valued at $35-40 apiece)

I regularly receive $10 off coupons for Amazon.com and Boxed.com and 30% off at wine.com

I purchased 4 Hamilton tickets at presale for $179 when re-sale tickets go for $700-800

 

The amount of these rewards in the past year has tallied well over $1,000 which would have required an enormous amount of spend to get to the same place with the Chase rewards accruals. Even assuming things the bigger tickets items were one time events, the regular savings of $10-$20 on regular purchases still saves hundreds over the course of a year.

 

TL;DR. The Chase card is great. What makes it great is the sign-up bonus and the accruals which they may be forced to reduce in the future. If that happens, AmEx is still the far superior card.

 

 

 

[TwoCitiesCapital]

http://about.americanexpress.com/news/pr/2016/new-travel-benefits-for-amex-platinum.aspx

 

AmEx giving into the competitive pressures. Ups travel rewards bonus to 5x from 2x on Platinum cards. This is better than Chase Reserve's 3x.

[rmitz]

http://about.americanexpress.com/news/pr/2016/new-travel-benefits-for-amex-platinum.aspx

 

AmEx giving into the competitive pressures. Ups travel rewards bonus to 5x from 2x on Platinum cards. This is better than Chase Reserve's 3x.

 

The 5x appears to just be for airfare.  This is much less broad than the Chase Reserve card.

[TwoCitiesCapital]

http://about.americanexpress.com/news/pr/2016/new-travel-benefits-for-amex-platinum.aspx

 

AmEx giving into the competitive pressures. Ups travel rewards bonus to 5x from 2x on Platinum cards. This is better than Chase Reserve's 3x.

 

The 5x appears to just be for airfare.  This is much less broad than the Chase Reserve card.

 

I mentioned that it was only 5x for travel rewards, but airfare is more specific so you're right.  Chase gives 3x on all travel and travel is more broadly categorized, though the redemption of those travel points is more limited in others (fewer partners and fixed rate redemptions).

 

Just up to the individual. The whole point of posting was to suggest that this business is going to get more expensive for AmEx going forward.

 

[ScottHall]

American Express should cut profits to zero in order to maintain its "economic moat," if that means giving 10x rewards. They need to innovate fast or I fear the future will not be as kind as the past.

[Spekulatius]

American Express should cut profits to zero in order to maintain its "economic moat," if that means giving 10x rewards. They need to innovate fast or I fear the future will not be as kind as the past.

 

That would be a bad idea. Their biggest asset is that they own the network and the cards, and their service. If you have a problem, you can call them and they take of it. With Visa or MC, that may not be the case, depending on the issuer.

[Guest notorious546]

http://www.bloomberg.com/news/articles/2016-10-17/american-express-s-plan-to-dethrone-chase-sapphire-as-credit-card-king

[TwoCitiesCapital]

http://www.bloomberg.com/news/features/2016-09-22/how-chase-made-the-perfect-high-for-credit-card-junkies

 

This one's going right at AXP.

 

I am waiting to see if they cut the benefits like Citi Prestige has (twice!). Users who sign up today can get the 100,000 travel points (good for $1,500 on their travel portal) and $600 in travel credit ($300 between now and December and another $300 reset in January). So basically, you pay $450 and you get $2,100 in rewards for Chase while Chase accrues something like $100 in interchange fees on your 4k of spend. That means Chase will lose $1,200 - 1,500 on each card that is canceled in March/April for the people who only signed up for the 100k travel points (like myself).

 

My guess is that in 6 months time they'll cut the sign-up bonus and reduce some rewards once they get an idea of what sustainable demand and revenues are.

 

 

https://www.bloomberg.com/news/articles/2016-12-06/dimon-says-new-card-cuts-profit-by-up-to-300-million-in-quarter

 

Chase losing $300M in a quarter on Sapphire Reserve card. Losses likely to continue at least in the near term as people cancel the card and redeem rewards/benefits.

 

This is something to watch too - rumor has it that American Express is revamping the rewards on their Platinum personal card to be announced in 2017. I expect that Chase may reduce benefits for the Reserve card in the near future; however, if they don't - we can expect AmEx's offerings to become significantly more expensive and competitive going forward.

 

[jimjam]

My apologies as this is a somewhat off-topic question but there appear to be some Amex card experts here... 8-)

 

I'm curious to know more about the efficiency of Amex's platform from the client's point of view and have a few questions:

 

1. How soon (hours, days, ...) after making a payment (domestic and international) with an Amex card is the charge visible via their website?

 

2. On international payments, how much commission plus margin on the interbank forex rate do they take for the currency conversion?

 

3. One of the most annoying aspects of my Visa card is the terribly cryptic merchant descriptions for each purchase.. Does Amex offer the full merchant name and address so one can identify each purchase and figure out whether it's legitimate or not?

 

4. Is there any mechanism for producing a temporary card number to use with an online merchant?

 

5. Can a payment be queried/contested through their online platform?

 

6. Is there an app (Android? Iphone?) that can notify me when a transaction occurs?

 

7. What sort of data formats are available for downloading the transaction history? How far back do they store it?

 

Many thanks for any pointers!

[siddharth18]

Following are answers that I know as an Amex customer:

 

1. Charge usually shows up as "Pending" within minutes of making the transaction. Depending on the merchant, it would post onto your account as a charge within 1-2 days or longer if the merchant just wants to obtain authorization until your goods are shipped, etc. It all depends on the merchant.

 

2. Depends on card. Amex platinum for instance has "No Foreign Transaction Fees." Now that doesn't guarantee that you will get the exact interbank forex rate that was prevailing at the moment you made the transaction. You will get whatever rate Amex gives you. But since they claim "no foreign transaction fee" on some cards, hopefully the markup shouldn't be too far (more than a couple of percentage points) from the actual interbank rate. See http://hungryforpoints.boardingarea.com/2016/06/foreign-exchange-rates-visa-vs-mastercard/

 

3. Usually yes. You get the merchant name along with the phone number for every purchase at a minimum. For things like Airline ticket purchases you get passenger name, airports, etc. "When merchants process your credit card, a certain amount of data is sent to your credit card company.  The amount of data is divided into 3 levels, with level 1 sending the least amount of data and level 3 sending the most data.  When you buy an airline ticket, the airline reports your purchase as level 3, since you can see the details of your itinerary on your credit card statement.  Since level 3 data is costly to the merchant processing your credit card payment, most merchants only send level 1 data." Source: http://travelwithgrant.boardingarea.com/2015/01/17/american-express-is-using-level-3-purchase-data-on-certain-merchants-including-staples-com/

 

4. Not at the moment for consumer cards. Citi and BofA credit cards do support it though which is awesome.

 

5. Yes. Credit card issuers won't let you dispute a pending transaction though. But with Amex, you can even flag a "pending" transaction - meaning you get automated emails from amex regarding any pending transaction. It will tell you if it posts or if it doesn't. You can dispute posted transactions via their website.

 

6. Not sure since I haven't used it, but likely. They do support email alerts that can be be triggered when a transaction over a certain dollar amount is authorized.

 

7. Download formats supported = .pdf (adobe), .xls (Microsoft excel), .csv (MS Excel or other programs).

[jimjam]

Thanks, siddharth18!

[abitofvalue]

AXP has a much bigger installed base of premium card holders compared to pretty much anyone else. So this has advantages and disadvantages. the big advantage is that they can design programs for a wider audience and spread the cost over a large base of fee paying card holders. For example their lounge access - which is the most used / sought after amenity among premium credit card holders - is better. AXP spends more on this amenity than the others and a result they have more premium lounge availability.  Similarly for many other benefits.

 

The big disadvantage is it costs a lot more to roll out new rewards offerings and experiment as much. This puts it at a disadvantage in a rewards war for growth. AXP's other disadvantage is that its customers generally are less willing to carry balances. This makes it more dependent on MDR earnings as it cant rely on interest income to the same extent. In fact, AXP cardholders hold significant balances on their other cards - seen estimates that show AXP has 50% wallet share of spend but only 25% loan share. that's not good.

 

no position.. just some random thoughts.

 

 

[TwoCitiesCapital]

AXP has a much bigger installed base of premium card holders compared to pretty much anyone else. So this has advantages and disadvantages. the big advantage is that they can design programs for a wider audience and spread the cost over a large base of fee paying card holders. For example their lounge access - which is the most used / sought after amenity among premium credit card holders - is better. AXP spends more on this amenity than the others and a result they have more premium lounge availability.  Similarly for many other benefits.

 

The big disadvantage is it costs a lot more to roll out new rewards offerings and experiment as much. This puts it at a disadvantage in a rewards war for growth. AXP's other disadvantage is that its customers generally are less willing to carry balances. This makes it more dependent on MDR earnings as it cant rely on interest income to the same extent. In fact, AXP cardholders hold significant balances on their other cards - seen estimates that show AXP has 50% wallet share of spend but only 25% loan share. that's not good.

 

no position.. just some random thoughts.

 

I think we'll see this change though. I dont' think it's that they're less willing - it's that they weren't allowed to until recently. I imagine there were circumstances where one could call AmEx and say "I'm about to buy a Ferrari on my Black Card, can I roll a balance for a month or two?" and the answer would have been yes, but traditionally you HAD to pay your balance in full every month.

 

It's only been this year that AmEx gave the option to Platinum cardholders to roll accumulated balances of purchases over $100 from month to month. I know I've taken advantage of that flexibility by rolling balances once or twice this year. I imagine others will be doing the same and we'll see interest income rising a proportion of their earnings as more and more cardholders get into the habit of taking advantage of that flexibility.

 

All of that being said though, they're rewards program is going to need to be revamped to appeal to the average user. I'm perfectly happy with them, but I'm also willing to go through the legwork of looking how to get the best value for my points by transferring to the right partners at the right time to maximize my rewards. If you're not doing willing to do that, the 1x point multiplier on everything doesn't really add up and the other benefits of the card are less tangible and so may carry less weight to the average consumer. AmEx's offering is likely to get a lot more expensive for them as they force the other card issuers to retreat from the premium area at major losses to defend their turf.

[SlowAppreciation]

http://www.wsj.com/articles/american-express-feeling-the-heat-from-competition-1484934385

[Dynamic]

Free access to the same WSJ article: "American Express Feeling the Heat From Competition"

http://news.morningstar.com/all/dow-jones/us-markets/201701207428/american-express-feeling-the-heat-from-competition.aspx

[Jurgis]

Just opened Amex Blue Cash Whatever card for $150 sign up bonus and $200 as 10%-cash-back-from-Amazon.com-purchases (which is really only $100 gain over Chase Amazon Visa which gives 5% back forever). Gonna get the bonus, but not sure gonna use it much. It gives 3% back on groceries, the rest is blah compared to 2% back Fidelity Visa.

 

A family member got one of their $500-in-points sign up bonus offers.

[SlowAppreciation]

https://www.nytimes.com/2017/04/14/business/american-express-chase-sapphire-reserve.html?_r=0

[walkie518]

Amex has been having a lot of trouble over the last couple years. 

 

Barclays beat Amex with Barclaycard and now Chase is hitting them from the other angle.

 

As a cardholder for a number of years, I've seen what was the most highly desirable card become a lesser value-add card.  It appears that Amex wants to reverse this trend but there is some tarnish and exodus. 

 

Amex, however, has a fabulous business with a tremendous amount of data worth much more than where the market prices.  Can Amex monetize this data to its own advantage?  Can Amex regain its luster?