American Express was your father’s card. OK, your rich dad’s card. Or, your rich friend’s rich dad card. But now, for a growing cohort of Gen Zers and millennials, it’s their card too. Amex has cracked the code with young people, and has managed to do so without abandoning its prestigious image.
American Express has long been considered THE sophisticated credit card company. Its products were historically seen as aimed at the jet set and the wealthy, with the term “rich” usually translating to “older”. The idea was not that young people would not use any Amex products, but that they would be introduced to the lower-tier products and eventually move up to the more premium versions of its cards as they got more. better jobs, would earn more money. etc. Amex also hasn’t gained widespread acceptance because of its swipe fees, which is what merchants pay every time they use a credit card. For years, customers were much more likely to get declined for using their Amex at a given merchant than when paying with a Mastercard or Visa, sometimes making the former a headache.
But that has started to change. Amex has updated its range of benefits to focus on younger people and offer them what might appeal to them. It used these benefits to get Gen Z and millennials – many of whom have that “rich” status – to sign up for premium cards as soon as possible. The business acceptance rate, at least in the United States, has also improved significantly. You no longer need to enter a restaurant or store to check if the American Express sticker is on the door. Add it all up and Amex transforms into a popular and relatively accessible status symbol for younger consumers.
The fruits of the new strategy were pretty clear in the company’s first-quarter earnings presentation: Gen Z and millennial consumers accounted for 33% of billed activity in its consumer division, which essentially means usage of its products for purchases. In contrast, Generation X represented 37% and Baby Boomers 31%. According to the company, millennials and Gen Z consumers accounted for 60% of its new customer acquisitions globally, and 75% of its new platinum and gold accounts were opened by millennials and of Generation Z. These accounts come with great rewards – and hefty accompanying fees. The Gold card costs $250 per year and the Platinum card costs $700.
“We realized that going after millennials and Gen Z was a key thing for us,” Amex CEO Steve Squeri said in an April interview with Jim Cramer on CNBC. He explained that while the company previously targeted them with no-fee cards, it was now trying to attract them with high-fee premium cards. “With millennials and Gen Z, we realized they wanted access, they wanted experiences, they wanted special privileges,” he said. So Amex delivered.
Amex has implemented a number of tactics to carry out its youth revolution and cement its place as a status symbol among relatively affluent millennial and Gen Z consumers. On the one hand, as Squeri has mentioned, we had to think about what the youngest want in terms of rewards. Yes, travel points for flights and hotels are nice, but so are other benefits that have helped make it a lifestyle card rather than just a travel card, said analyst Michael Miller at Morningstar Research. The company has integrated rewards such as credits on Uber rides, Disney streaming services and subscriptions to the New York Times and Wall Street Journal. He invests money in Saks shopping sprees and offers credits for Walmart+ memberships.
“The way they finance this is they work with the retailers to share the costs, and they basically act as very high-end coupons,” Miller said. “That’s really how they maintain their appeal and luxury, by not really compromising on the price of the cards themselves.”
Amex offers some of its customers special access to various events, including the ability to purchase tickets in advance or obtain certain passes to the US Open and Coachella. And it sometimes also gives them reserved spaces inside these events, keeping its reputation for exclusivity intact. For my part, I’ve found myself at events staring at an American Express exclusive area and trying to see if anyone I’m with has the magic card to get us in.
“Amex is, ‘You know what? We know this age group goes to Coachella. We’re going to have – if you have a Platinum card, you can get into the Amex tent. And we’re going to have simple things that are really hard to get or expensive at Coachella, free water fountains, a place to sit in the air conditioning,” said Daisy Hernandez, credit card editor at The Points Guy. “They’re the kind of people who say, ‘I’m going to get this credit card because I want that extra premium access.'”
Millennials and Gen Z, many of whom crave experiences rather than possessions, also aren’t sleeping on Amex’s travel perks. The Platinum card, for example, offers credits on hotel and airline fees, covers the cost of a Clear Plus membership for airport security, and grants free lounge access at several airports. It also offers restaurant reservation benefits through the Resy platform.
“They haven’t given up on travel at all,” Miller said. “It’s really more of an add-on.”
They are paving the way for the next generation.
For many younger consumers, having an Amex rewards card is a bit like having a good, varied subscription service that costs them less than $60 a month. Amex says Platinum Card credits are worth about $1,500 per year, more than double the annual fee. (Amex, of course, has a ton of cards that aren’t premium and offer a variety of different perks or perks. It’s a true choose-your-own-adventure situation depending on which one you want, if you want. .)
From the American Express side, this all makes sense. Many young consumers don’t carry cash and expect to be able to put everything on their card. The company’s continued focus on high-income, high-spending customers, including Gen Z and millennials, gives it greater bargaining power with merchants who don’t want to turn away these consumers. And once Amex recruits these customers, it has a lot more time to profit from them compared to older consumers who are closer to retirement and, you know, death.
“They’re laying the groundwork for the next generation, and they believe they have a great offering and a lot of potential for growth, because if you only look after people who are much older, those people potentially won’t be around in 20 years , while the millennium still will be,” said Stephen Biggar, director of financial institutions research at Argus Research.
Amex is not alone in targeting the young and wealthy. Chase Sapphire, for example, gives value for money with some of its offers, namely its Reserve card. And all consumers may want to consider the tradeoffs that come with their expensive rewards cards. Research has shown that rewards cards can be a transfer of wealth from the poor to the rich due to the high fees that accompany them (although these fees have been decreasing somewhat in recent years). And even if you don’t care what happens to the guy paying cash behind you at the bodega, if you don’t pay your credit card bill every month and instead carry a balance, you might not not take advantage of it for your enjoy your rewards.
All that aside, the Amex Platinum card looks interesting. Did I spend a significant portion of reporting on this story repeatedly searching for said card and trying to decide if I should eat the fee and get one? I did it. I have a few trips coming up, and the Centurion Lounge looks nice.
Emilie Stewart is a senior correspondent at Business Insider, writing about business and economics.