Last week a rumor started on the popular travel forum, FlyerTalk, speculating that American Express is planning to increase The Platinum Card’s annual fee in Q3 2021! The rumored change would increase the card’s annual fee from $550 per year all the way as high as $795. The other possible increased annual fee amounts could be $695 or $745. Regardless of which increase American Express chooses, this represents a range of a 26% to 44% higher annual fee. Now the good news is that this is just a rumor right now, so American Express might not actually change the annual fee, and if they do, this would go into effect for new cardmembers only in Q3 2021 and current renewing cardholders starting in 2022. Let’s dissect this rumor and see if it has any merit, and if it does, what this increase might look like.
Why Amex Might Increase The Platinum Card’s Annual Fee
Without a doubt, you’ve been impacted in some shape or form by the COVID-19 pandemic. This has changed spending and lifestyle patterns indefinitely, and it could make sense for American Express to evolve The Platinum Card from a primarily travel card to a more “lifestyle” card. That, coupled with the Chase Sapphire Reserve’s 2020 increase from a $450 to $550 annual fee, may make the case compelling for American Express to distinguish itself as a more premium, almost luxury, charge card.
American Express cardholders historically have been, on average, the wealthiest and have higher income levels when you compare its customers to those of other banks, such as Chase, Citibank, or CapitalOne. These more affluent customers tend to be price inelastic, meaning they’re less likely to cancel their Platinum Cards due to the rumored $145 to $195 annual increase. Additionally, they’re more likely to be able to work remotely and thus less likely to have been impacted by the pandemic. Now of course just because they’re probably doing just fine financially, they’re still going to expect an increase in benefits to help justify the higher annual fee. Before we get to what this might mean for you, let’s look at why this rumor could be all smoke and mirrors.
Why the Rumor Might Not Be True
Okay so before we get too far ahead of ourselves, let’s start by checking the source. This was started on a public forum by a new user. This was that user’s first post, and to be honest, any of us could start such a rumor. Usually, with these types of rumors, we see screenshots or some level of evidence that supports it, which is not the case with this annual fee increase rumor.
Beyond the validity of the rumor itself, let’s consider why American Express might conclude that there isn’t a valid business case for increasing the annual fee. First, the optics might look bad to increase the annual fee of their top charge card during a pandemic. Secondly, they’ve been offering higher and more compelling sign-up bonuses for new cardmembers to increase the number of customers they have. Next, they tend to make their revenue from annual fees and the transaction fees they charge vendors, not interest. If they increase the annual fee, they could see a reduction in customers or push back from current cardmembers that then decide to keep the card but move their transactions to a competitor’s card instead.
While the validity of the rumor and the argument for increasing the annual fee is a little murky from a straight business perspective, let’s take a look at what this might look like if they do increase the annual fee.
What Would it Mean for You - Lifestyle?
So what would The Platinum Card that sports a nearly $800 annual fee look like and why would you want it? Currently, The Platinum Card offers up to $500 in annual credits, making the net annual fee just $50. We could see a scenario where American Express drops the $200 annual airline fee credit, just like they did with the Gold card earlier this year. However, that would create a gap of up to $495!
American Express might consider shifting The Platinum card into a more “lifestyle” card. This could mean offering anything from an Equinox membership to offering annual credits for dining or even groceries. Equinox memberships would be less useful than say a “digital wellness” benefit that could be applied to Peloton or SoulCycle memberships. American Express’ partnership with Equinox in both Amex Offers, and most notably their Equinox Body Lab in the JFK Centurion Lounge, strongly suggests that IF American Express were to offer a wellness-related benefit, it would likely be with Equinox.
Another interesting caveat is that The Platinum Card has always been weak with bonus categories compared to the Chase Sapphire Reserve. The Platinum Card earns 5X Membership Reward points on airfare, but the only 1X on everything else whereas the Chase Sapphire Reserve earns 3X on all travel and dining. It’s possible that we could see The Platinum Card add new bonus categories, even outside of travel-related ones. We could see American Express offering an annual credit that includes gas or groceries, as the Chase Sapphire Reserve does for 2021. One thing to consider here is that historically, American Express has been the leader in the premium card space so it’s highly unlikely that they would copy Chase. The Platinum Card, for example, just added cell phone insurance, something that very few other cards offer but that is still very relative even during the pandemic.
In all reality, most people sign up for The Platinum Card for access. Access to the Centurion Lounges and the Fine Hotel and Resort program, as well as the numerous additional benefits. If the annual fee does increase, we fully anticipate that American Express will offer benefits that either meet or exceed the increased annual fee. So what should you do?
Our Recommendation For You
Hang tight. This is a highly speculative rumor. We’ll be watching to see if the annual fee rumors continue over the next few months. If they do, it’s a good idea to have a game plan. For us, if the rumors continue into June 2021, that means we’ll begin advising our friends, family, and readers to consider signing up for The Platinum card prior to the increase. This will allow you to take advantage of the nearly 6+ months of benefit overlap before the rumored increased annual fee would take effect.
What do you think about the possibility of an American Express increasing The Platinum Card’s annual fee? We want to hear your thoughts! DM us on Instagram, email us at email@example.com, or message us on Facebook to let us know!