During the American Express second quarter earnings call, CEO Stephen Squeri offered a number of insights into their credit card business and travel benefits.

The company is seeing lower rewards expenses because the highest cost rewards are usually travel rewards, and that’s not how people are spending their points. There’s also less usage of travel-related benefits, not least of which is surely the food costs they’re saving with Centurion lounges closed.

He says that they aren’t seeing more people cancelling their cards than usual, but that cardmembers are down because they haven’t been spending much to market their cards to new customers. He views that as temporary.

And he twice mentioned engaging customers in areas like streaming services and wireless phone charges, that they’ve seen an increase in those charges from customers. That’s no surprise: what he didn’t explain is that they’re giving cardmembers credits to spend on those services.

Perhaps most importantly for credit card customers is the observation that Marriott, Delta, and Hilton cards are performing better than American Express’ own card products – and Squeri offered an interesting reason why:

In fact, our cobrand cards in our consumer business, are actually performing better than some of our proprietary cards. Now, that may seem counterintuitive, but when you look at our partnership with Delta, Hilton, BA, and so forth, these cards are performing better. Why they’re performing better?

Well, they’re performing better because 90% of the spending is not on the cobrand partner, 90% of the spending — these are not store cards, these are all-purpose cards. And, lot of people, their psychology is, they save points for the big trip. The other part of the psychology is, I want status and I can get status through spending. And I think when this is over, status is going to be even more important as we move forward.

Is he right? He doesn’t offer an argument why elite status is going to be more important. In a world with lots of empty hotel rooms and airline seats that could mean that upgrades are easier in the near future. On the other hand with reduced business travel demand the things that elite status can offer may be less expensive to just buy.

Notably also – and while we didn’t get more detail on this – an important area to watch is American Express introducing more non-travel benefits (presumably to its proprietary cards) later in 2020 or early in 2021. This suggests to me they aren’t confident travel alone will be enough of a motivator for spend, at least on their non-cobrand products.

you will see us continue to morph our value propositions into next year by adding on to our premium value propositions with more lifestyle non-T&E aspects and developing other value propositions for other products and services.

Interesting (perhaps just to me), Squeri criticized the idea of COVID surcharges, suggested that American Express should have lower office space costs going forward as they do more work from home even after the pandemic, and also noted that American Express has been hit with tens of millions of charges refunding customers for goods and services not received, where the merchant went out of business and there wasn’t enough charges held back. They “had a $53 million loss with an international merchant” though in that case they were insured against the expense.