American Express and JPMorgan Chase are ramping up their competition for upscale cardholders.
JPMorgan fired the opening salvo when it teased a refresh of its Sapphire Reserve credit card last week on its Instagram page. Amex then touted major changes coming later this year to its Platinum cards via a Monday press release.
On Tuesday, as JPMorgan unveiled hundreds of dollars worth of new perks and pricing for its premium Sapphire Reserve card, the bank said it would hike annual fees for the card by 45% to $795. The Amex Platinum card currently has an annual fee of $695.
The American Express Platinum card and the Sapphire Reserve card are both geared to higher-income consumers. Both charge hefty annual fees, but provide perks like dining and travel credits or priority reservations at exclusive restaurants.
Amex dominated the premium card network until Chase launched the Sapphire Reserve card in 2016.
The American Express card refresh was likely in the works for months before the card network's Monday news release, TD Cowen analyst Moshe Orenbuch said in an interview. But the timing of the company's initial announcement, just days after JPMorgan's Instagram post, was likely not a coincidence, Orenbuch said.
"There's a definite competitive dynamic going on there," Orenbuch said.
Amex's news release amounted to an announcement for an announcement planned later this year, giving very little new information and saying more details would come.
“I would say that maybe they rushed that announcement,” Orenbuch suggested. Although he stressed that Amex does not appear to be rushing the refresh itself. “These are not things you can do by flipping a switch,” he said.
An American Express spokesperson declined to comment on the timing of its release or say precisely when the card network will provide more information on the refresh.
Amex and JPMorgan aren’t just competing with each other when they update their premium cards, said Tony DeSanctis, senior director of payments for the consulting firm Cornerstone Advisors.
“They’re also thinking about buy now, pay later,” he said in an interview.
American Express has openly courted members of Gen Z, who are increasingly using BNPL, he noted, and the perks on premium cards must appeal to members of that demographic who are looking for alternatives to credit cards.
JPMorgan’s Instagram marketing post was light on details until the company sent out a news release announcing the new fees and perks on Tuesday.
The list of new perks for the Sapphire Reserve card include a $500 annual credit at certain hotels and resorts and a $300 credit at restaurants that are part of the Sapphire Reserve’s dining program.
It remains to be seen what new perks Amex will offer cardholders, but the company said the forthcoming changes would represent its largest ever investment in a card refresh. That likely means bigger annual fees and more perks, Orenbuch said.
“This is not just about raising the price,” he said. “You have to provide significantly more value than the increase in price to the consumer.”
