AmEx Fires Another Shot at Chase's Sapphire Reserve -- Update
March 29 2017 - 3:01PM
Dow Jones News
By AnnaMaria Andriotis
American Express Co. is taking another shot at J.P. Morgan Chase
& Co.'s popular Sapphire Reserve card, planning to increase the
points it is doling out to consumers who sign up for its Platinum
card and spend a lot in the first three months.
AmEx in coming days is expected to increase the points bonus to
60,000, from 40,000, according to a person familiar with the
matter. But there is likely to be catch: To get the larger amount
of points, card users will have to spend $5,000 in the first three
months after receiving the card, up from $3,000 currently, the
person said.
An AmEx spokeswoman said, "We've always had competitive sign-up
bonuses combined with a range of premium benefits and
services."
AmEx's move would come just weeks after J.P. Morgan officially
concluded its 100,000-points offer to Sapphire Reserve customers
and downgraded it to 50,000 points. Sapphire Reserve cardholders
need to spend $4,000 in the first three months to get these
points.
Competition between credit-card issuers vying for market share
has been growing in recent years. One of the biggest battles is
playing out between AmEx and J.P. Morgan with the luxury rewards
cards that come with hefty fees and big rewards. These cards are
aimed at high spenders, and a points system geared at consumers who
will spend a lot on a new card is one of the main tools the lenders
are using to lure new card customers.
The battle has been especially bruising to AmEx because of the
intense competition it is now facing in a market that it has
dominated for decades. Doug Buckminster, president of AmEx's global
consumer services group, referred to the Chase Sapphire Reserve
launch during a presentation this month as "a full frontal assault"
on the Platinum card.
AmEx could roll out the higher points structure on Thursday when
new benefits, announced earlier this month, kick in. That is also
when its higher annual fee of $550, up from $450, goes into effect
for new sign-ups.
This is the third large boost to Platinum rewards that the card
company has made since October -- moves that several analysts see
as an attempt to fend off competition from the Sapphire
Reserve.
AmEx executives have said that the company experienced a small
increase in the number of consumers shutting down their Platinum
cards during a two-week period after Sapphire Reserve launched last
year. But they added that the so-called attrition quickly fell to
historically low levels afterward. An AmEx spokeswoman said the
company has more Platinum card members today than at any point in
the card's history.
Analysts are also concerned about the impact that some of the
enhanced rewards will have on the company's expenses. Marketing
spending and promotional expenses, which includes sign-up bonuses
the company pays out to new card users among other items, hit a
record $3.7 billion last year.
Currently, Platinum's 60,000 points are worth $600 when redeemed
for airfare and $420 when redeemed for hotels through AmEx's travel
agency. Chase's 50,000 points are worth $750 when redeeming for
travel, including airfare, hotels and cruises, through Chase
Ultimate Rewards.
AmEx's executives say they are more focused on attracting and
retaining Platinum users through experiences, including
reservations to hard-to-get shows and restaurants as well as access
to airport lounges.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
March 29, 2017 14:46 ET (18:46 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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