What's Happening?
A CNBC Select reader, Brad from Florida, is reconsidering the value of his American Express Platinum Card due to a decrease in travel. The card, known for its extensive travel perks such as access to over 1,550 airport lounges and various statement credits,
carries a high annual fee of $895. Brad, who has accumulated around 300,000 Membership Rewards points, is contemplating whether to keep the card or downgrade to a less expensive option. The dilemma arises from the card's benefits being less useful for non-travelers, despite its potential value. Downgrading the card could preserve Brad's points and offer more rewards on everyday spending.
Why It's Important?
This situation highlights a broader issue for American Express and its cardholders, particularly those who have shifted their spending habits away from travel. The high annual fee of the Platinum Card is justified by its travel-related perks, which may not appeal to those who travel less frequently. This could lead to a trend where cardholders opt for cards with lower fees and more relevant rewards, impacting American Express's premium card market. Additionally, the decision to downgrade rather than cancel can affect credit scores positively by maintaining account history, which is a significant factor in credit scoring models.
What's Next?
Cardholders like Brad may consider downgrading to other American Express cards such as the Gold or Green Card, which offer more rewards on everyday purchases like dining and groceries. This shift could prompt American Express to reassess its card offerings and benefits to retain customers who are not frequent travelers. The company might also enhance retention offers to persuade cardholders to maintain their Platinum Card membership, potentially offering statement credits or bonus points.
