Note: This article was written before the final information came out. The churning community has been had by Amex. Even the Doctor of Credit got it wrong. The real surprise was merely a Platinum refresh. There may be more coming in the future, but this could be it. Read this in the context of what American Express should have done to properly compete with Chase.
Rumors have been consuming the admittedly tiny corner of the internet over the past week about a new American Express card. It all started on reddit, with the now famous #drunkamexgirl talking to a redditor in a bar in New York. She mentioned that there was something big coming. Everyone was busy working on it, and it would be here on October 5th. To add to the intrigue, the comment was deleted. (Guerilla marketing?) New evidence came from the doctorofcredit who had other sources confirming the imminent release of a new card.
That’s when the shit really hit the fan. With viable confirmation, some CSR and Platinum cardholders began reaching to the Amex retention group, and mentioning features that the CSR has, and the Platinum doesn’t. Some retention reps began to let on of a new product on the horizon that would solve their problems. Others were offered 20K MR to stay after either no spend, or a small minimum spend.
Later sources confirmed the card’s name: The Tier One. What still isn’t clear is if this is a Platinum Card refresh, or an entirely new card. If it is an entirely new card, the current Platinum cardholders will be eligible for the signup bonus, a must to retain customers.
So what would a new Amex card need to have to truly compete with the CSR?
The new card would have to compete with the 100K UR point bonus that is currently being offered to CSR customers. Anything below 70K is unlikely to sway many to the Amex side and put spend on the card.
The current Platinum card carries a hefty fee. What isn’t hefty is its earning power. After the initial bonus, earning MR is incredibly slow. 1 dollar, 1 point, and no bonus categories, or higher earning power for travel. A travel rewards card that doesn’t reward travel is highly unlikely to be used on any regular basis. Travel rewards earning at 3 UR per dollar are practically a requirement, while everything else would likely need to earn at above 1 UR per dollar to steal customers back. 1.5 or 2 UR per dollar seems like the most likely solution.
The CSR comes with a best-in-class $300 travel credit that can be applied to almost anything travel related. It also posts instantly. This benefit alone brings the cost of membership down to an attractive $150. The Platinum Card offers a $200 per year airline fee credit, that can only be applied to incidental costs on an airline chosen at the beginning of the year.
The Platinum Card currently offers Centurion lounge access, which Chase cannot compete with, while both cards offer Priority Pass Select. One way for Amex to really differentiate that benefit is to offer free guest access. Chase currently charges for guest access to PP lounges.
American Express could easily undercut the CSR when it comes to trip delay insurance. The current Chase trip delay insurance is only triggered after a six hour delay or more, while the Citi Prestige comes into effect after three. Amex could match or beat Citi’s offering here with two or three hour delay coverage. Chase offers primary car rental insurance, which Amex could also easily match.
Status in other loyalty programs is also likely to be a new battleground. Amex is currently winning that battle, with complimentary HHonors Gold Status, as well as SPG Gold along with National, Hertz, and Avis. Chase chose to give status and discounts on rental cars, and letting the LHR Collection act as the stand in for hotel status.
|Benefit||Chase Sapphire Reserve||Tier One (Prediction)|
|Earning Power||3X travel and dining, 1X on everything else||3X travel, 1.5X-2X everything else|
|Travel Credit||$300 annual travel category, posts instantly||$200 annual, one pre-chose airline only, only incidentals|
|Lounge Access||Priority Pass Select, pay for visitor(exact rules are unclear in practice)||Centurion, Priority Pass Select, free visitor|
|Loyalty Program Status||National Car Rental, Avis, Silvercar||SPG Gold, HHonors Gold, Avis, Hertz, National|
|Trip Delay Insurance||Triggered after a delay of six hours or more||Triggered after a delay of less than six hours, likely two or three hours|
If the Tier One turns out to be a separate card in its own right, then the relationship between the Platinum and Tier One is going to have to be rectified. The current $450 annual fee appears to be a point of resistance that would be hard to break in today’s environment. To keep the Platinum, it needs to be refreshed, and possibly given a separate set of features as compared to the Tier One. The Amex Concierge service is a likely candidate for exclusivity, as are the myriad of statuses that come with the Platinum. They need to tread a fine line to compete with the CSR, and prevent the devaluation of their own product line.
That’s my best guess at what is going to come out on Wednesday, now the only thing left to do is wait and see. Whatever it is, I hope for Amex’s sake that is better than their current Platinum offering by a long shot. And that it’s completely made out of metal. That would be the final nail in the coffin against the CSR.