With over 900,000 new Chase Sapphire Card signups last year alone, the market for premium reward credit cards seems hotter than ever. Today, U.S. Bank announced that it will test that temperature with its own entry to rival the American Express Platinum Card and Chase's Sapphire Card. Can the market withstand the weight of another premium metal reward credit card? Let's get ready to rumble.
By Rick Ferguson
Quoted in MarketWatch, U.S. Bank retail payments solutions head John Steward said that the new U.S. Bank Altitude Reserve Visa Infinite Card (editor's note: credit card brand names are getting as long as "Pirates of the Caribbean" movie sequel titles) "totally" and "unapologetically" competes with Chase and AmEx. "Consumers are learning it's a smart thing to pay a bit to get a whole lot more," said Steward.
In this case, "paying a bit" means a $400 annual fee to hold the card vs. $450 for the Chase Sapphire and Citi Prestige, and $550 for the American Express Platinum Card. In exchange for that annual fee, cardholders will earn three points per dollar spent on airfare, hotels, and other travel categories; three points per dollar spent via mobile wallets; and one point per dollar on all other purchases. Soft benefits include access to celebrity chef tours, hotel upgrades, concierge service, travel booking service and free in-flight Wi-Fi. A lucrative signup bonus will offer new cardholders 50,000 bonus points for spending $4,500 on the card within 90 days, as well as an annual $325 annual travel credit.
As the Wall Street Journal points out, this latest salvo in the war for the 1 percent leaves American Express, which long had the premium card market to itself, particularly vulnerable. Money quote:
"AmEx already faces a number of challenges. It has been trying to recover from recent losses of large card partnerships and now finds itself on the defensive in a market it has long dominated. AmEx on Wednesday released first-quarter results that beat market estimates, though revenue net of interest expense was down 2% from a year prior, the fourth consecutive quarterly decline."And the card battles are personal with much of the competition coming from AmEx alums. Gordon Smith, currently head of J.P. Morgan's consumer and community banking division, was with AmEx for more than 25 years until 2007. John Steward, U.S. Bank’s president of retail payment solutions, who is spearheading the Altitude Reserve launch, spent 26 years at AmEx. Similarly, Citi's chief executive of cards, Jud Linville, was previously chief executive of consumer services at AmEx."
Other analysts wonder when someone will hit the ceiling on the premium card market. Money quote from MarketWatch:
"It will be a tough ask for some consumers to check out another luxury credit card with a hefty annual fee, experts say. 'Nobody quite knows how big the market is for these high annual fee credit cards or if somebody who has already applied for another one would be willing to do it again,' said Matt Schulz, a senior industry analyst at the credit card site CreditCards.com. 'That might be challenging for this card.'"
For their part, the credit card jockeys over at the sub-reddit r/churning are practically chomping at the bit to get their hands on the new card - particularly to take advantage of the 3x mobile wallet bonus. While NFC limitiations may make the bonus inapplicable to Millennials who game reward cards to pay utilities via Plastiq and apartment rents via RadPad, the r/churners still seem ready to play. Typical is the endorsement from Travel After Work:
"The Altitude reserve visa infinite metal card, with an annual fee of $400, and $325 travel credit, is definitely a no-brainer even without other perks, such as 12 annual gogo wifi passes, low-end PPS membership, silver car discount, TSA pre reimbursement, etc. And what makes it too good to be true is the mobile wallet spending bonus 3x, unlimited...think about all things you can do with mobile pay, you can get 3x and 4.5% if redeemed in travel category. Again! It's [a] no-brainer."
Back in the r/churning salon, the enthusiasm may be summed up best by redditor CreditPikachu: "Holy f**k so the 3x mobile wallets anywhere bonus is real. Hope you're ready, U.S. Bank, because you're about to get your s**t rockkkkkked."
Maybe that premium card ceiling still has a little headroom yet.
Rick Ferguson is CEO and Editor in Chief of the Wise Market Group.