If there’s any doubt whether people are willing to pay $900 for a premium credit card, just look at the latest quarterly results for American Express: The credit card issuer reported Friday that it beat third-quarter earnings estimates and raised its full-year outlook.
It’s been a month since American Express refreshed its Platinum line of credit cards, raising the annual fee by $200 to $895, and that change is already paying dividends. The company has seen “strong” demand for these cards and more than 500,000 people have requested the New York-based issuer’s new pocket mirror card.
“The initial customer demand and engagement exceeded our expectations, with new U.S. Platinum account acquisitions doubling compared to pre-refresh levels,” Stephen J. Squeri, chairman and chief executive officer, said in a statement.
American Express reported that revenue rose 11% from a year ago to a record $18.4 billion in the third quarter, driven largely by a 9% increase in card member spending. Earnings per share came in at $4.14, higher than the consensus of analyst estimates.
American Express Platinum cardholders—both individuals and businesses—account for about $530 billion in annual billings, according to the company, and the recent refresh has helped drive additional revenue. In the first three weeks since the card refresh, the company reported a 45% increase in new high-yield savings accounts from these members and record-high bookings on Amex travel.
RACE FOR PREMIUM MARKET
Squeri said the successful relaunch of Platinum cards “reinforces our leadership in the premium space.” Indeed, the race for the premium credit card market has heated up in recent years as issuers have raced to one-up each other with a wide variety of cardholder benefits.
JPMorgan Chase bumped up the annual fee on its Sapphire Reserve card from $550 to $795 in June, promising even more perks at this higher rate, and American Express followed with its fee increase in September.
Offering these types of perks comes at a cost: American Express has paid $13.6 billion in card member rewards year-to-date, a 12% increase from the same period in 2024. That’s more than double the amount of another expense: Salaries and employee benefits.
But nabbing the premium market is clearly a priority for issuers, even if a majority of cardholders aren’t willing to fork over $800 to $900 for the privilege of using a credit card. Consumers who pay more than $500 in annual credit card fees spend nearly three times more each month than those with lower-fee cards, according to figures from J.D. Power.
MARKET REACTION
And thanks partly to the successful relaunch of its Platinum cards, American Express also announced Friday that it has raised its full-year guidance for both revenue growth and earnings. It now expects a 10% increase in revenue, up from 9% previously, and a $0.30 boost to earnings per share, to a total of $15.50.
Stock market investors rewarded the better-than-expected earnings report: Shares of American Express surged more than 6% by mid-day Friday. The stock is up nearly 16% this year, and has outperformed the S&P 500.