Is American Express raising premium card fees too soon?

Luxury credit card users expect to pay top dollar, but the 25% hike to American Express’s Platinum Card annual fee might be a bit much even for habitual travelers, given the still-diminished use of air travel and hotels.

The Platinum card’s new $695 fee — its first increase since it climbed to $550 in 2017 — makes Amex’s silver card the most expensive of major travel cards, with the exception of Amex’s own $5,000-a-year Centurion Card and a handful of specialty cards that are literally plated in gold.

JPMorgan Chase’s J.P. Morgan Reserve Card for high-end private-banking customers, at $595 a year, previously held the top spot in mainstream luxury credit card fees. Chase's Sapphire Reserve fee sits at $550 a year and Citigroup’s invitation-only Citi Chairman card fee also ranks near the top, at $500 a year.

Road warriors were braced for a boost in elite cards' annual fees, especially after Amex CEO Steve Squeri told a group of investors late last year that the company planned changes to begin recouping credit card fee revenue.

Some observers question whether it’s too soon to raise fees on luxury credit cards that are typically used heavily for travel when it's still so early in the post-pandemic recovery phase.

But as it overhauls the Platinum card, Amex appears to also be going after higher-income, digitally savvy millennials, the first wave of whom turn 40 this year.

New perks that come with the higher-priced card build on services Amex introduced during the pandemic that were a hit with home-bound users, including credits for streaming digital entertainment and for virtual and in-person exercise classes.

Amex Platinum customers will receive up to $240 in credits annually for purchases or subscriptions on Audible, The New York Times, SiriusXM and Peacock. A $300 annual statement credit is also newly available for Equinox fitness clubs or the Equinox+ virtual workout app.

For the first time, Amex is also giving Platinum customers free membership in the $179-a-year airport security expediting service CLEAR, which sets it apart from other fee-based travel cards that routinely offer a statement credit for Global Entry and TSA PreCheck (which Amex Platinum also provides).

Users can enroll in the newest features through the Amex app, and they can also get a $200 hotel credit at more than a thousand properties bookable through the app.

The question is whether consumers who are only just beginning to resume travel will find value in paying the higher Platinum card fee at this point.

Business travel volume — which encompasses many executive Platinum card users — is still paltry, and it may be many more months before it returns to pre-pandemic levels, said Brian Riley, director of credit card advisory at Mercator Advisory Group.

“Some issuers are starting to beef up their card programs in hopes that the big spenders will return, but don’t be too sure that’s happening yet,” Riley said.

Revolving credit card balances took a dive during the pandemic when travel spending halted. They have stabilized, but are still not growing, Riley said.

“This quarter will be stronger because recent stress tests indicate that some reserves can be freed, but unless the tide turns, the third quarter will be challenging for most credit-card issuers,” Riley said.

Amex, which will report second-quarter earnings on July 23, has seen revenue improve this year. Card volume crashed in the first quarters of 2020, but have steadily improved ever since. During the first quarter of this year, Amex’s revenue reached $9.1 billion.

Analysts don’t expect Amex to return to 2019’s level of card volume and profits until next year, but the company appears to be betting that its habitual users and maturing higher-income millennials will bear the higher fee in return for unique perks that in some cases are easier to access through apps.

As part of the latest upgrade, Platinum card users also may use Resy’s Global Dining Access service for exclusive reservations at top restaurants with invitations to special events. Platinum customers must still go through Resy’s app — which Amex purchased in 2019 for an undisclosed sum — to access those services, an Amex spokesperson said.

Other Platinum benefits carry over, including 5X rewards points on flights booked directly through airlines and also on flights and hotels booked through Amex’s own travel service, with a $200 annual airline fee credit, $200 in credits annually toward Uber rides or Uber Eats, and complimentary upgrades at more than 1,200 hotels.

Platinum card users also may access Amex's Centurion elite airport lounges, whose locations and amenities are listed within the card's app. The first Centurion lounge opens in London later this year.