AXP - American Express

[Jurgis]

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

 

“I don’t think it would be American Express,” one diner said. “I feel like that would be braggy, like I’m trying to prove I’m a big shot.”

 

Others nodded in agreement. “I’d probably use this,” said another, pulling out a blue-tinged credit card. “An Amex says you’re rich, but this says you’re interesting.”

 

LOL. WTF. Amex says you're rich?  ::)

I've had Amex Blue from ... hmmm ... almost student days. 2001 or so if not earlier.

Maybe it wasn't the right Amex.  8)

 

Regarding millennial appeal - I guess that explains the Amazon.com 10% cash back offer (see my post above).

Still, once the offer is gone, that card is also gone from my wallet.

 

Just got Citi something card for 50K bonus points that I will cancel as soon as I get the points.  8)

 

The use-everyday is Fido Visa 2% back. Others are for 5% back situations (Chase Amazon, Chase Freedom, Discover) and foreign spending (CapitalOne Quicksilver).

[flesh]

My gut reaction has always been, ewwww, there rewards suck compared to xxxxx. Plus, having american in the name, seems like it would prove less desirable world wide vs a more generic name MC or Visa which are more broadly defined world wide. Help me change my thinking, why is this company going to grow for the next decade? Or is this simply interesting when it get's too cheap for a quick puff?

 

[Jurgis]

My gut reaction has always been, ewwww, there rewards suck compared to xxxxx. Plus, having american in the name, seems like it would prove less desirable world wide vs a more generic name MC or Visa which are more broadly defined world wide. Help me change my thinking, why is this company going to grow for the next decade? Or is this simply interesting when it get's too cheap for a quick puff?

 

I'm gonna get flack for this I think, but here it goes.

 

IMO Amex missed a lot of the opportunity to get international cachet that is assigned to top/premier US brands.

10-15 years ago Amex had lower fees for foreign transactions than Visa/MC cards (~1%).

Then fees on a bunch of Visa/MC went to zero, Amex did not.

Now, I already have to ask retailers whether they take Amex even in US. In foreign country, fogetaboutit. If Amex had zero fees and there were other huge advantages, I would. Not now.

 

Then the whole "Amex says you're rich". This could have been a huge sell across the globe. Did they do it? Not so much I think. Yeah there was that Chinese guy who paid XXX M for Modigliani using Amex. So I guess they did it a bit. But ask around - do you really see affluent Europeans or Asians using Amex at home and abroad? Maybe I'm in the wrong circles, but I don't.

 

So... they had international advantage... due to their travel network and image ... and they mostly squandered it IMO. Will they gain it back? I don't think so, but maybe I'm just not much of Amex fan.  8)

 

(There are people on this thread who love Amex, their benefits, their service, etc. I've never experienced their service, so maybe I just missed out on a lot  8) ).

 

[rkbabang]

I just got the AmEx Blue Prefered card.  I was using my Sallie Mae Barclaycard for gas and groceries, but they just changed it from 5% down to 3%, so I was looking for a better option.  The AmEx has 6% Groceries and 3% gas with a $95 yearly fee.  They gave me a $150 sign up bonus (pays for the 1st year and a half of annual fees) + 10% for the first 3 months on restaurants.  I still use my Chase Amazon for Amazon (5%) and my Target redcard for target (5%) and my TJX card for TJX/Marshalls (5%) and my Fidelity VISA (2%) everywhere else.  I've never thought AmEx made you look rich. That is ridiculous.

 

 

[pau_]

It will be interesting to see if the Chase reserve card has staying power when the 2nd annual fee comes around. Chase is paying a lot of money to market this card. I don't consider myself a so-called churner (3 total cards, every couple years look at options). I signed up for the Chase card because it was such an obviously good promotion.

 

My personal experience to-date:

  ($450) annual fee

  $600    $300/calendar year travel reimbursement (uber, parking, rental cars, hotels, flights)

  $1,312 international flight from 100,000 point bonus

  $803  international flight from normal spending (3x points food, travel)

  $40    priority pass/airline lounge use (no idea what this actually costs chase)

----

$2305

 

I have not availed myself of their precheck/global entry reimbursement due to my outdated personal philosophy of egalitarianism before the law, but that's an additional $100 benefit for many.

 

Chase obviously isn’t stupid, but I’m willing to bet a large chunk of people will downgrade their cards to a no-annual fee one when the second $450 fee comes around without all the additional promotional benefits. Will they make it up on interest, interchange, and cross-selling?

[JayGatsby]

It will be interesting to see if the Chase reserve card has staying power when the 2nd annual fee comes around.

Interesting article on Amex vs chase from today: https://www.nytimes.com/2017/04/14/business/american-express-chase-sapphire-reserve.html

 

I use Chase sapphire for restaurants/travel (4.5%) and Fidelity (2%) for the rest. I've started really appreciating Priority Pass, but there's nothing really exclusive to Chase about it.

[sleepydragon]

I had chase saphire. Used the free points and then canceled it. Same as a few other people i knew.

[rogermunibond]

Maybe apocryphal but confernce room of execs spending 10 mins trying to figure out FOMO before looking it up on Google (would have been funnier if they used Bing a la Ballmer) says it all

[Gregmal]

Just my observation but I've kind of observed something different than the "Amex means you're rich" stereotype. No one that I know, that would be considered financially responsible uses an Amex as their primary card. Why? Because there are almost always cards out there with better rewards programs for specific categories. Most of the people I know now rotate cards. Doing this properly you can almost always be getting at least 3%, usually 5% back, on pretty much everything you buy. If anything, I've noticed over the years that Amex has gotten very lax with their lending standards and if anything, is taking on just about anyone who will sign up. I know people who can't get a department store card who have Amex charge cards with nearly unlimited spending ability.

[flesh]

Maybe amex would benefit from web buying it and then hurting short term cash flow to change it into a legit visa mc competitor with a similar model.

[SlowAppreciation]

Maybe amex would benefit from web buying it and then hurting short term cash flow to change it into a legit visa mc competitor with a similar model.

 

Why do you think it has to get acquired for that to happen?

[sleepydragon]

Maybe amex would benefit from web buying it and then hurting short term cash flow to change it into a legit visa mc competitor with a similar model.

 

Web won't acquire AXP because it's a bank holding company and Web doesnt want to become a bank holding co.

But i think it makes sense for JPM or even GS to buy it though.

[Mephistopheles]

Maybe amex would benefit from web buying it and then hurting short term cash flow to change it into a legit visa mc competitor with a similar model.

 

Web won't acquire AXP because it's a bank holding company and Web doesnt want to become a bank holding co.

But i think it makes sense for JPM or even GS to buy it though.

 

What about WFC? They've got a much smaller card presence than JPM.

 

However I think neither JPM or WFC can acquire another deposit taking institution under current banking regulation since they each have over a certain % of US deposits, IIRC.

[abitofvalue]

Just my observation but I've kind of observed something different than the "Amex means you're rich" stereotype. No one that I know, that would be considered financially responsible uses an Amex as their primary card. Why? Because there are almost always cards out there with better rewards programs for specific categories. Most of the people I know now rotate cards. Doing this properly you can almost always be getting at least 3%, usually 5% back, on pretty much everything you buy. If anything, I've noticed over the years that Amex has gotten very lax with their lending standards and if anything, is taking on just about anyone who will sign up. I know people who can't get a department store card who have Amex charge cards with nearly unlimited spending ability.

 

lax lending standards? Check out their DQ and NCO rates.. lowest in the industry by a country mile. if anything they could be accused of being too narrowly focused on being ultra-premium to the point where they are overly dependent on MDRs and acceptance became an issue.  hence the OptBlue initiative but that lost revenue needs to come from somewhere - ergo more lending.   

 

[TwoCitiesCapital]

Just my observation but I've kind of observed something different than the "Amex means you're rich" stereotype. No one that I know, that would be considered financially responsible uses an Amex as their primary card. Why? Because there are almost always cards out there with better rewards programs for specific categories. Most of the people I know now rotate cards. Doing this properly you can almost always be getting at least 3%, usually 5% back, on pretty much everything you buy. If anything, I've noticed over the years that Amex has gotten very lax with their lending standards and if anything, is taking on just about anyone who will sign up. I know people who can't get a department store card who have Amex charge cards with nearly unlimited spending ability.

 

lax lending standards? Check out their DQ and NCO rates.. lowest in the industry by a country mile. if anything they could be accused of being too narrowly focused on being ultra-premium to the point where they are overly dependent on MDRs and acceptance became an issue.  hence the OptBlue initiative but that lost revenue needs to come from somewhere - ergo more lending. 

 

And allowing charge card customers to maintain moderate balances that they pay interest on which they've done for the last year or two to bolster revenues.

[Gregmal]

Just my observation but I've kind of observed something different than the "Amex means you're rich" stereotype. No one that I know, that would be considered financially responsible uses an Amex as their primary card. Why? Because there are almost always cards out there with better rewards programs for specific categories. Most of the people I know now rotate cards. Doing this properly you can almost always be getting at least 3%, usually 5% back, on pretty much everything you buy. If anything, I've noticed over the years that Amex has gotten very lax with their lending standards and if anything, is taking on just about anyone who will sign up. I know people who can't get a department store card who have Amex charge cards with nearly unlimited spending ability.

 

lax lending standards? Check out their DQ and NCO rates.. lowest in the industry by a country mile. if anything they could be accused of being too narrowly focused on being ultra-premium to the point where they are overly dependent on MDRs and acceptance became an issue.  hence the OptBlue initiative but that lost revenue needs to come from somewhere - ergo more lending. 

 

Don't know. Maybe they are super strict and this is just a result of the tiny sample size I am referring to. I've just been surprised because Amex used to be a card people wanted but not everyone could get. Now I know more than a handful of younger folks whom probably couldn't get auto loans carrying around Amex charge cards and yes, carrying monthly balances.

[BG2008]

For what it's worth...

 

I recently got a Chase Ink credit card and an Amex Business Platinum.  So far the Amex Business Open is beating the pants off the Chase Ink. 

 

Amex - Everything is streamlined.  They have an awesome receipt match iPhone App that allows me to match up receipts as I am signing up the receipts in the restaurants.  This comes in super handy at year end in case you get audited.  Amex provides access to the Centurion Lounges. Their website is streamlined and built for the business owner. 

 

Chase - I can't log in, I can't pay my bill online, Tech support takes an half an hour, no one knows how to fix my problem.  For three months now, they can't fix my online log in issues. 

 

Conclusion, I'll gladly pay the $450 for Amex and have it streamline my operation.  As someone who runs a business, I don't have the time or patience to deal with Chase. 

 

Also, I recently had a flat while on a business trip. I called Amex and was able to get someone on the phone within a couple minutes.  Unfortunately, Amex doesn't recover roadside emergency (put a doughnut on  your car for you).  But I was able to figure that out within 3-5 minutes.  BTW, if you ever get a flat while renting from Hertz or Enterprise, the thing to do is to put the doughnut on and drive to the nearest (most likely airport rental office) for an exchange.  Don't bother calling Geico etc.  This assumes if you're in a safe location.  If you have to change a flat on the high way, you may want to get the tow truck guy to come and do that for you. 

[BG2008]

Also, Amex offered me a business card through LinkedIn.  They were able to approve me fairly quickly.  For business cards, I believe the cardsholders have to personally guarantee the cc debt anyway.  I thought that was pretty genius.  Chase made me verify my address and I had to provide proof.  Streamline and up to date versus old fashion and clunky. 

[sleepydragon]

i bought a ton of axp.

I think most investors are focusing on the headline news about the retail side of AXP, debating the same old decade debates about the attractiveness of using axp card.

They failed to realize two thing: one is the commericial side of the business of AXP. And two, people have a habit of using the card they have been using. So there is some stickyness.

[sleepydragon]

Another thing people dont get is how hard it is to prevent loan loss.

Chase did come up with some new cards with rewards, but they are getting bad loans now, and how many of these people will renew after getting 1000 reward?

Buffett have tried to have Geico offer a credit card, and failed.

 

[boilermaker75]

i bought a ton of axp.

I think most investors are focusing on the headline news about the retail side of AXP, debating the same old decade debates about the attractiveness of using axp card.

They failed to realize two thing: one is the commericial side of the business of AXP. And two, people have a habit of using the card they have been using. So there is some stickyness.

 

Since April of 2015 I have been writing puts at strike prices of less than up to $80, followed by covered calls if put to. At some point I will probably hold on to a small position. But option writing has worked out well for greater than 2 years so far! (fingers crossed)

[winjitsu]

https://www.forbes.com/sites/nickclements/2017/05/11/spending-on-credit-card-rewards-has-more-than-doubled/#7c6eeeb634a1

 

For years, American Express dominated the market for credit card rewards. However, under the leadership of many former American Express executives, Chase has been aggressively investing in new products and chasing American Express' most lucrative customers. In 2016, for the first time, Chase spent more than American Express on rewards.

 

[Green King]

https://www.forbes.com/sites/nickclements/2017/05/11/spending-on-credit-card-rewards-has-more-than-doubled/#7c6eeeb634a1

 

For years, American Express dominated the market for credit card rewards. However, under the leadership of many former American Express executives, Chase has been aggressively investing in new products and chasing American Express' most lucrative customers. In 2016, for the first time, Chase spent more than American Express on rewards.

 

Point being? you know that is an expense item. All people have the right to burn money. Lowering prices in a mature market doesn't seem to be the smart move.

[winjitsu]

Point being? you know that is an expense item. All people have the right to burn money. Lowering prices in a mature market doesn't seem to be the smart move.

 

Just some interesting data-points, no opinion one way or another.

[BG2008]

For what it's worth...

 

I recently got a Chase Ink credit card and an Amex Business Platinum.  So far the Amex Business Open is beating the pants off the Chase Ink. 

 

Amex - Everything is streamlined.  They have an awesome receipt match iPhone App that allows me to match up receipts as I am signing up the receipts in the restaurants.  This comes in super handy at year end in case you get audited.  Amex provides access to the Centurion Lounges. Their website is streamlined and built for the business owner. 

 

Chase - I can't log in, I can't pay my bill online, Tech support takes an half an hour, no one knows how to fix my problem.  For three months now, they can't fix my online log in issues. 

 

Conclusion, I'll gladly pay the $450 for Amex and have it streamline my operation.  As someone who runs a business, I don't have the time or patience to deal with Chase. 

 

Also, I recently had a flat while on a business trip. I called Amex and was able to get someone on the phone within a couple minutes.  Unfortunately, Amex doesn't recover roadside emergency (put a doughnut on  your car for you).  But I was able to figure that out within 3-5 minutes.  BTW, if you ever get a flat while renting from Hertz or Enterprise, the thing to do is to put the doughnut on and drive to the nearest (most likely airport rental office) for an exchange.  Don't bother calling Geico etc.  This assumes if you're in a safe location.  If you have to change a flat on the high way, you may want to get the tow truck guy to come and do that for you.

 

Update on the Chase Ink issues - I had to pay my bills via phone for the third time since I got my Chase Ink Card.  Since I got the card a few months ago, the calls that I had to make was not worth my time as a business owner.  Now they told me that I never signed up via online.