I’m sick and tired of credit card coupon books, especially when they’re used to justify annual fee increases. Some consumers can make the economics work. The economics of the Entertainment Book used to work, too! There can be value here but the approach doesn’t respect my time, and it isn’t premium.
American Express really built this model with Platinum. And it’s spread. Delta cards have higher annual fees and more statement credits. It’s work and it’s a lot to track. And they’ve got you moving spend to the card – and often recurring spend, that’s annoying to switch out of – by doing so.
Now, in addition to revamping Hilton Surpass this year, the Hilton business card is losing benefits, seeing a new increased annual fee, and statement credits to help you cover that fee. It’s all so… annoying.
The card no longer will come with 10 annual Priority Pass visits or even free nights after each of $15,000 and $60,000 spend in a year. Yet it will cost more.
They’ve added $60 per quarter in Hilton statement credits and National Car Rental executive status. And they’ve changed ongoing earn – instead of 12x on Hilton spend / 6x on certain business and travel categories / 3x on everything else it’s now 12x on Hilton / 5x on everything else up to $100,000 in spend each calendar year then 3x thereafter.
The card, in my view, is more expensive and less valuable. Although it’s clear that for the first $100,000 in spend on the product what the value proposition is – effectively in my opinion a 2.5% rebate, but there’s no reason to have a nearly $200 annual fee to get that.
Amex is hardly alone, right? It was one thing when there were just airfare or travel credits against annual fees, which were almost as good as cash for people who spend real money on airfare. But when it’s merchant-funded offers like statement credits to drive business to a third party (your card company, effectively, selling you B2B) or offering accelerated earn with a specific partner and the issuer may not even be paying for it but it’s used to justify a higher annual fee?
I get it. The issuer wants to raise the fee, and make that go down easier. They want you moving your spend and jumping through hoops – and there are only so many cards you’ll do it with so if they succeed they capture more wallet share. American Express data must suggest the approach works because of how it’s spread. They’re happy. Customers are tired. At least I am.
The question is, have they figured out how to game us? Or will it erode brand value long-term?
Can’t say I agree. There are plenty of no-fee cards for people uninterested in the points game. For the rest of us, the coupon book approach is fun. Premium? No, but let’s not pretend to be. If we were premium, we wouldn’t have a care in the world about points.
They do it because it works, due to breakage of coupon benefits, and wishful thinking of prospective cardholders in terms of valuing benefits. But you are right, coupon booking is not premium. But Amex obviously hasn’t jumped the shark yet, so expect more of the same.
@ Gary — 100% agree. We have already closed eight Plat business cards. When the annual fees come due, we will be closing our ninth and final Plat business card, our Gold business card, our second Plat consumer card, our Hilton business card and our Surpass cards. We have wasted far too much time attempting to extract maximum value from these cards. If AMEX has thousands of people doing the same, they will feel it on their bottom line. We’ll keep our four DL reserve cards, one Plat consumer card, and our two Aspire cards. The rest aren’t worth the trouble and/or annual fee.
Maybe time to switch to a cash back card? I switched most of my spending to the fidelity 2% back automatically deposited in a 529 account. You can also choose a brokerage account with no annual fee. I’ve been reading your blog x 15 years but with devaluation and the need to travel with a family of four mileage cards have lost their appeal.
AMEN, Gary.
I will be cancelling this card once I hit the $15,000 to get the free night. I will keep the Aspire card. They increased the fees and CUT the benefits! A double whammy.
Gary, you are correct. This is beyond frustrating. I also like how you say that American Express feels they will gain wallet share by doing so. While I only have a sample size of about 10, including friends and family, most of whom are Small business owners, I can tell you that with all of the Amex changes, many are cancelling their cards and shifting spend to competitors not other American Express cards. No other bank is launching credit cards with such high annual fees as compared to Amex and the coupon book is most definitely not premium.
One of my family members has a Hilton Business Card and spent about $18,000 per year on the card which is 90% of her business spending that can go on business credit cards. The 10% that didn’t go on the Amex went to Visa because the merchant doesn’t accept American Express. Guess what, after learning of these benefits she will close the card since she valued the free night certificate and will move her spend to another card that is not American Express.
Since the refreshes on multiple American Express cards, we have eliminated 2 Business Platinums out of 3, will be closing a Hilton Business Card, closing an American Express Business Gold Card among others. All of that spending is going to credit cards not issued by American Express that offer a better value proposition. Between our personal and business cards we spend about $500,000 per year on our cards.
Expansive or expensive??
Thanks for just acknowledging this aggravating trend. I’m mostly out of the rewards credit card world for these reasons.
Gary,
You can be “sick and tired” of it just like whining about devaluations and other changes that you don’t like but that doesn’t mean they will stop. Business models change all the time. If you don’t like it cancel the cards and move on it don’t be surprised when this becomes the norm across all cards.
Also expect more cut backs in benefits as a result of the Visa and MC settlement (yes I know small cut but still they will look for a way to make up the profit). Also seeing more and more 2-3% fees to use credit cards. Wouldn’t be surprised if that also isn’t the norm for practically all credit card payments within 5 years.
Things are changing and will never go back so enjoy things today – they will only get worse. I can see the day that reward cards (points/miles/cash back) are not used nearly as much (even w the reduced benefits) due to the surcharges merchants apply. Debit and bank drafts would be the norm. Obviously not good for those of us that like the points and miles but also likely fatal for the many bloggers that suck off the teat of the industry.
The coupon and/or membership model is used in other industries including groceries.
Kroger is the largest grocer in the country – using multiple operating names – and tracks consumer data and offers targeted and non-targeted coupons.
Costco is one of the most successful retailers and has a membership fee that most people justify as giving access to merchandise they can’t get elsewhere at least at those prices.
The free market consumer sector is very complex. Each consumer has to decide what model works for them and how much complexity they are willing to accept.
@AC “that doesn’t mean they will stop. ”
Of course not, as I observe Amex sees the strategy *as working*
“expect more cut backs in benefits as a result of the Visa and MC settlement”
4 basis points for a limited period of time is immaterial
@Gene – I don’t know if that was meant to be satire, but it was pretty funny and spot on, either way 🙂
@Tim Dunn this isn’t a coupon “and/or” membership model, it’s a hundreds of dollars per year membership that buys coupons.
Not new! The Entertainment Book that I mentioned dates to 1962!
I agree it’s annoying but I am able to use the Grubhub credits to pay for about half of my lunches and this is another way to keep the large sign up bonuses coming in. For me it’s keeping up with which cards have monthly statements credits based on a calendar month and which ones are statement credits. Either way I can usually start at the first of the month and get them all in. A few cards like B of A Premium Elite and US Bank Altitude still have annual credits and can be used twice in the first cardmember year with one annual fee.
Sounds like they are gaming the.gamers – those who spend a lot of time trying to maximize rewards across a stack of different cards instead of concentrating spend on a couple.
I am only ok with coupon model when it’s things I normally would spend on. The Amex gold works well for me generally finish the year with about 500-600 in benefits vs the 250 AF. I just wish they would swap out Equinox benefit and add FuboTV to the digital benefit to make the Amex plat work as well. The Saks credit is truly worthless.
Amex will probably not see the full impact right away. My expiration dates are in May and June. This means I will keep the cards for another year at $95, unless I need the credit card slot.
After July 1, I will only be putting $60/quarter on the card. I will not pay $195 for the card. The cards will be cancelled.
PS I used to really like this card. I spent a lot of money on the card in order to get the FNCs.
It will stop when they realize the strategy doesn’t work. Which will take a while.
Does Hilton get any of the fee? Or just revenue from AMEX purchased points (and stays).
Is the removal of the free night legal for those that recently got the card?
@ Mark — When an AF is $695, I don’t think that it is fair to call the cardholders “gamers”. Granted these Hilton cards don’t have fees that high, but the useless AMEX Platunm Business cards do.
My family members canceled their Venture X cards because of the limitations of booking through their portal to get the travel credit. Specifically, you can’t book Southwest Airlines, even by phone.
Unless and until a lot of people decide “the perks” for their own travels and other going around are no longer worth it and ditch the cards, the card-issuers will only escalate their playing of this game of selling the customers as products to the business partners of the card-issuers.
What I found interesting very recently was how Priority Pass this year got into partnership with the professional tennis player world in hopes that the lounges and Priority Pass show up a lot more in the social media feeds and elsewhere due to tennis players use of the lounges going forward. Seems to me like Priority Pass knows it has a bit of a challenge as the bank card issuers try to cut back on their Priority Pass expenses.
Beachfan,
CFPB is rather useless when it comes to bank card issuers playing games, but it’s worth the effort to see what they say if only for entertainment value. I find that the big banks and CFPB have problems with even understanding the meaning of the marketing material put forward by the bank card issuers and they all tend to side with whatever the banks claim when it comes to complaints about reward card benefits as long as there is some kind of “response”.
The indignation gave me a chuckle.
“The question is, have they figured out how to game us? ”
Hah, 99/100 of your readership is into gaming them. The other 1/100 reads for the articles about the near naked Penthouse model flying Spirit with her 90lb therapy dog, seated next to “that guy” with his bare feet on the bulkhead wall.
Now, yes of course I agree “normal people” signing up for a credit card will be more profitable for Amex due to the higher fees and breakage. But normal people have what, two or three credit cards? And a normal person who signs up for a Hilton card is much more likely to be regularly engaged with Hilton which is win-win for both Amex and Hilton.
By making signup bonuses once in a lifetime and requiring engagement with the actual loyalty program Amex is slowly squeezing us, the gamers. We are way ahead of them of course but on the margins I think this is a good move for Amex.
I am tired of this as well. I see major increases coming to the AMEX Plat cards probably in 2025. When customers complaint AMEX has a script to tell them how great the credits are. Most customers dont really do the math.
@nsx I too nixed the Venture card because it requires booking through their portal. I don’t count anything that requires booking thru a portal as a good deal anymore. Portals complicate our lives.
@AC what you say has ben said at other times about the death of credit card rewards. What you state about merchants seem to be mostly mom and pop restaurants who decided to take advantage after covid. Customers spend more when they can charge, so those extra fees can also backfire and cost them business. Customers are not turning to debit cards either. The fear for card companies are electronic payments that are nearly fee free. Some other digital structure. When I buy from major retailers and the vast majority of my spend there are no surcharges. That is not changing. Experts in the retail space will tell you that a real time payment system would hurt them badly. You still get protections vs paying cash. It seems to me that as everything, credit cards have become political. Hearing claims that there is attempt to get rid of cash for all sorts of dark web theories. The teat will still be there. This has been called dead many times before.
If AMEX Delta wants to see a flood of downgrades from Platinum to Gold they are doing it just right. I will drop to GOLD as the Platium benefit of Caribbean travel isn’t worth the increased fees and I’ve never been there and no plans. Hawaii a little more “maybe, someday” but no plans so I will l not renew Platinum level. Will moving to GOLD get me the mileage incentive for new Gold members?
It’s a smart move on the card issuer’s part. Many people pay the higher fee, and don’t take advantage of all the perks, so the issuer makes more.
The smart account holders need not worry, they will make sure they get full value, if not, they will cancel. Keeping track IS hard work, then again, it’s your job!
Gary,
the point is that coupon/discount and membership models have been around for years. Some retailers don’t do any of it – same price for all, open to all – while some combine pieces of some of those elements and more.
It is frustrating when a model you like is changed but that is the free enterprise system.
@robertw – I fully understand your logic and agree that credit cards are beneficial to most retailers (even small one) versus cash and also that people spend more on credit cards so that should be a cost of doing business. In addition, credit cards have protections for the purchaser that debit cards don’t (although due to my relationship with BofA I have many of the same consumer protections on my debit cards).
Also, I understand, as Gary noted, the recent agreement by MC and Visa is a very small reduction and a 5 year freeze. However, it also allows merchants to charge a premium for various types of Visa or MC purchases (miles/points cards cost them more) so I expect to see more and more of this. Yes it was small businesses originally but also now most government or university payments have the surcharge and just this week I encountered it at a restaurant inside a Caesars casino (no surcharge for a room charge which of course I did then didn’t pay any surcharge at checkout). I fully expect more and more businesses to add surcharges, especially under the recent agreement that allows them to target specific Visa or MC purchases. Also, once you see a major retailer or travel company add even a modest surcharge expect it to quickly become industry standard.
Then you add the erosion of benefits. I’m not even worrying about the allegded devaluation of hotel/airline awards (cash price has gone up so value per point hasn’t been devalued as much compared to 5-10 years ago as people think).
When you add it all up I think we have seen the “glory days” of reward cards and also the highest value redemption opportunities. As benefits and what the points/miles can buy decline in many’s opinion, along with additional fees charged to use cards it will radically change things. May not want to believe it but mark my words – in 5 years you will long the “good old days” of 2024.
You know, this is just like “resort fees.” Recently, I had a destination fee justified by a daily $5 credit for (overpriced) drinks at their bar, and a daily $10 credit at their (overpriced) restaurant. No different than what amex does with these dribble-drabble of month credits, too small to buy anything, and designed for maximum breakage. Just can’t wait for the marketing department to repackage the platinum in a book that says “$2400 in savings inside.”
@Greg, there are higher cash back opportunities than 2%. Especially if you do travel and can spend your cash back on travel costs.
It’s even worse than that – you take the credits at face value; many are not. For instance, my Uber Eats and Grubhub credits on the Gold card are worth up to 30% less due to the large markup that both services pass on, even with pickup orders. While they didn’t use to, I am now seeing even national chains like Subway offer lower prices on their own sites compared to Uber! It’s only a matter of time this house of cards collapses.
Well…. this week I closed my AA Barclaycard, just not using it since I have a CITI executive card too. Replaced with a Flying Blue card. I also knocked my Platinum Amex to Green. $600 saving, shove your statement credits, I saved $600. My main objection to the Plat Amex was the one benefit I do try to use — the clubs — remains essentially worthless. Overcrowded, food and bar options on a nosedive. I’ll suck it up and use the airline clubs, which actually isn’t a hardship since they’re better than the Centurion Clubs IMO..
Statement credits to me are not an attraction.. it’s either W.O.R.K or steering to use them. As I told the Amex rep, no, I didn’t care about a Dell statement credit since I only ever buy Lenovos (which work).
I now have two high fee cards, a Cap One Venture X and a CITI Exec card (+one for my wife). I have never been to a Cap1 Club; the first time I’m turned away will be the day my VentureX goes West. As to the Citi Exec card… at some point a hard decision has to be made fee versus paying for my wife’s visits. When we’re flying together we are always on Business tickets and thus typically get lounge access anyway.
The whole high fee thing is just starting to stick in my throat and I don’t need the ego reinforcement any more.
When Citi changed the AA World Executive card benefits and AA changed the Admirals “Club” admittance rules, I dropped them both. Now American Express Hilton Surpass card is on the chopping block. Not worth $150 a year especially without the 10 Priority Pass complementary visits. Although the AE Small Business card for $95 looks attractive.
@AC You are looking at 2024. I have been in this since forever. I was in AA Advantage in 1987. The same things were said about premium award travel ages ago when Delta and United went to a revenue based system and many award chart changes. With that being said there have been tons of devaluations in programs. Yet there are always sweet spots. American Airlines, their business is more rewards than flights. The business is too big to kill it. I never use a debit card for anything. Banks love when you do. I am generating some level points for every dollar of spend and business wise I still generate plenty even though I used to do more. When Marriott took over SPG there was a huge devaluation. That has continued. I knew those glory days were over, but found value with Hyatt and in some cases Marriott. I know people in business that generate millions per month in points. The eco system is too big to break it down. The customers are smart. They will seek other programs to move away any that are not favorable. I insisit that there will not be fees to customers for using cards. Its just not something that would not cause a huge push back. Little mom and pops dont matter.
One day the target customer will realize that most Amex cards are no longer worth the annual fee. Until then it’s business as usual.
The cost/benefit is no longer in the positive column for me – just not worth the time. I will choose the highest return with the easiest effort. I also no longer collect S&H Green stamps.
100% agree. I cancelled my Amex Platinum card at the end of the first year. I only got it for the 150K points which justified the annual fee. But it was one of the most frustrating experiences in my credit card journey. Keeping track of coupons and jumping through hoops was exhausting. I value my time and sanity.
You are right on this is B.S.
“The question is, have they figured out how to game us?”
Really? You have ask that? In 2024?
Marketing people have figured “us” out since the first bearded “dude” sold another bearded dude a “better rock to hunt your dinosaurs with.”
We all.live under the false pretense that we’re sticking it to The Man.
Reality is, The man owns us. Has owned us for millenia.
@Gary, I am wondering if you (or any of your readers) might be aware of a dedicated spreadsheet that might have created to make it easier to track spend requirements, etc for any of these types of cards? Thanks.
@ Michael — If anyone has a good spreadsheet, I bet it would be Freqyebt Miler.
Frequent Miler…
Thank you @Gene!
You can’t beat a free cash back card. Frees up load of time spent chasing silly coupons and keeping track of them, and the economics are far superior.
That, of course, if you make more than $10/hour. If not, then your time is effectively free and these type of cards could be a decent deal.
Yah I’m canceling my Amex business card I spent 200k on the card and will shift spending elsewhere. There’s no benefit for spending big anymore without the free nights.
I too was shocked at the rise in fee for the Surpass Card. I’ve been a Hilton Honors member for 22 years yet the included Gold Status with the card has over the years, given diminished benefit. Some lounges are no longer permitted for Gold etc…now Priority Pass gone! AMEX/Surpass clearly is not giving it’s customers any of what we want in benefits. Even Mariott Bonvoy/AMEX issues a free night certificate every year for being a cardmember.
The coupon book works because they get more money and more easily.
Just do the math. How much spending you do need to put on a card that Amex earns $100 vs $100 earned from coupon not spent/used.
The only card I actually put spending on, is the Gold. And I am on the fence every year to cancel it, and every year get a retention offer to keep it.