New Rival for Sapphire Reserve, Platinum Rewards Cards
April 20 2017 - 12:30AM
Dow Jones News
By AnnaMaria Andriotis
American Express Co.'s Platinum card is going to get even more
competition.
U.S. Bancorp plans on May 1 to launch a premium card geared
toward high spenders and millennials. This adds to the threats
facing AmEx in a card category where it was until recently
unrivaled.
AmEx launched the Platinum card in 1984 and for decades remained
the only large force in the premium rewards card market. That
changed in 2013 when Citigroup Inc. launched its Prestige card; the
pressure intensified last year after J.P. Morgan Chase & Co.
launched its Sapphire Reserve card.
The hugely popular Sapphire Reserve offered a large sign-up
bonus and a generous points system that in many ways trumped the
Platinum card and has become a must-have with many millennials.
AmEx has since upgraded its card benefits three times, though the
company says the moves were in the works before the Sapphire
Reserve launch.
Minneapolis-based U.S. Bancorp is less of a national threat to
AmEx. But if "U.S. Bank is thinking about it, then PNC [Financial
Services Group Inc.] is thinking about it, KeyBank is thinking
about it, and it means the barrier to entry is low, anybody can
roll out" one of these cards, said Vincent Caintic, managing
director at investment banking firm Stephens Inc. who follows
AmEx.
Called the Altitude Reserve Visa Infinite, U.S. Bancorp's card
will offer three points per dollar spent on airfare, hotels and
other travel categories and three points per dollar on any category
when cardholders make the purchases with their mobile wallets. The
card will cost $400 a year, which is lower than the $550 a year
AmEx charges for the Platinum card or the $450 for a Sapphire
Reserve card.
Like AmEx's card, the Altitude Reserve claims a host of benefits
including access to celebrity chef tours, upgrades at high-end
hotels, a concierge service for dinner, sports events and other
reservations, as well as help with hotel and airfare bookings and
free in-flight wi-fi. The card also offers points for spending with
smartphone wallets, such as Apple Pay or Samsung Pay, which the
bank is hoping will resonate with millennials.
AmEx already faces a number of challenges. It has been trying to
recover from recent losses of large card partnerships and now finds
itself on the defensive in a market it has long dominated. AmEx on
Wednesday released first-quarter results that beat market
estimates, though revenue net of interest expense was down 2% from
a year prior, the fourth consecutive quarterly decline.
For AmEx, the fight over rewards cards comes as it has been
trying to recover from recent losses of large card partnerships.
And the card battles are personal with much of the competition
coming from AmEx alums.
Gordon Smith, currently head of J.P. Morgan's consumer and
community banking division, was with AmEx for more than 25 years
until 2007. John Steward, U.S. Bank's president of retail payment
solutions, who is spearheading the Altitude Reserve launch, spent
26 years at AmEx. Similarly, Citi's chief executive of cards, Jud
Linville, was previously chief executive of consumer services at
AmEx.
Rivals have piled into the premium-card market to boost purchase
volume among creditworthy borrowers. Consumers who sign up for
these cards tend to be affluent and pay their bills on time. For
some issuers, the cards are an opportunity to grab new customers
and sell them other services, whether it is a mortgage or wealth
management, down the road.
U.S. Bank said its card is aimed at on-the-go professionals. To
receive the card, consumers who aren't yet U.S. Bank customers will
need to open an account, such as checking or savings, with the
bank.
The Altitude Reserve will have the cheapest annual fee in this
category, compared with Platinum, Prestige and Sapphire Reserve.
Unlike AmEx's Platinum card, the Altitude Reserve, like the
Sapphire Reserve, will allow cardholders to receive statement
credits, which are dollar-for-dollar reimbursements, on a broad
category of travel expenses, including airlines, hotels, taxis, car
rentals and cruises.
The AmEx Platinum requires cardholders to choose an airline for
a calendar year and then offers up to $200 in statement credits for
incidental fees like checked bags and in-flight drinks. Altitude's
annual statement credit is $325 and the Sapphire Reserve's is
$300.
--Peter Rudegeair contributed to this article.
(END) Dow Jones Newswires
April 20, 2017 00:15 ET (04:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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