The Credit Card Gods
Must Be Crazy
Must Be Crazy
THURSDAY, MARCH 24, 2022 --
Whenever I pick up my American Express card, I see "MEMBER SINCE 76" in the lower right and think: "Man, I'm getting old!" and "Geez, these credit card gods must be crazy."
For the benefit of Mr. Kite, let's dispense with the age talk this week. No one wins in that conversation. Instead, let's zero in on the credit-card-gods-must-be-crazy angle because it offers ripe fodder for the craziness of life on the road. Really, fellow travelers, we're not the crazy ones, they are. I can prove it.
You have read in recent days from JoeSentMe's least sentimental contributor, Bob McGarvey, about why he's stuck with Amex Platinum throughout the pandemic. In a nutshell, even with the recent fee bump to $695 a year, Bob says he's ahead nearly $500 based on the card's perks, promises and frills. Good for Bob. I like it when the good guys win--and live to blog about it.
Me? Not so much. My tale of Platinum is much crazier--and may reflect your Amex experience. It may even cost American Express more than $1,300 in real dollars--not perks or the chimera of promised frills--if I "upgrade" from Amex Gold and rejoin the Platinum parade from which Amex made it so easy to depart two years ago.
At the beginning of the pandemic in 2020, my American Express Platinum card came up for renewal. I'd held a Platinum card since its 1984 debut. Like most smart observers of the card market, I frequently made the case that it was the one card to rule them all if you traveled frequently. With grants of status (automatic Hilton Gold and Marriott Gold plus National Executive), a $200 airline-fee statement credit, airport club access via Priority Pass Select and its growing network of Centurion Lounges, the $550-a-year card basically paid for itself if you lived your life on the road.
But there was no life on the road in 2020. Even at the start of the pandemic, we knew 2020 would be a lost cause and 2021 was, as they say, an unknown unknown. It occurred to me that maybe, just maybe, $550 was a little rich for a card that was going to be essentially worthless to travelers who were not traveling.
So I did what I thought was the prudent thing. I called Amex and said: I'm a cardholder for a long time--"Wow! You've been a member longer than I've been alive!" blurted out the startled Amex rep--and I feel I deserve some sort of break on the annual fee.
Startled young rep promptly lapsed into embarrassed silence. Then, the answer: Nothing doing. Not a pound, not a penny, not a soo--and certainly not the $50 concession I was asking from Amex.
"You can't see yourself reducing the annual fee by 9% to save a [then] 45-year relationship?" I asked.
"I'm sorry, sir," she said. "There's really nothing I can offer you."
I then did the time-honored thing: Hung up and called again. Different rep, same answer, Same for a third call.
I responded rationally. I cancelled my Platinum Card--and had my wife do the same thing when hers came due. She busted down to a Green Card (annual fee $150) and I demoted myself to Gold, which costs $250.
I won the game in 2020: I flew nowhere, Hilton and Marriott automatically extended the status level the Platinum card once conferred--and I saved $300 in fees.
I won the game in 2021, too: I did fly, but all of my travel was in international business class (free club admittance, of course) or to and from domestic destinations where Amex club entry was irrelevant because member lounges were still shuttered. Hilton and Marriott automatically extended my elite status again, too. And I saved another $300 in fees.
Six hundred bucks to the good so far. But I knew 2022 would be different. I still have my freebie elite status from Hilton and Marriott, but I will be flying a lot more and I need extensive club access. So I went out and got myself the Capital One Venture X card. It comes with Priority Pass Select, its fee is lower ($395) than Amex Platinum (or Chase Sapphire Reserve), I'm getting a 100,000-mile acquisition bonus and I've already cashed a $200 vacation-rental statement credit. Since I value credit-card points at a universally low one penny, my $395 annual fee will be offset by at least $1,200 in travel rewards plus whatever club entry fees I won't have to pay.
Like I said, the credit card gods are crazy, but at least I know why Capital One is being so generous. This is its first play for high-value, high-spend customers and it needs to make a splash. Now we can question whether having us high-travel rollers in the fold will profit Capital One--Chase took tens of millions in losses when it introduced Sapphire Reserve and its brand extensions seem both pointless and profitless--but at least we know what Capital One is thinking.
American Express? No so much. On Tuesday, I received a glossy, expensive, black-and-silver promo mailing from Amex. It wants me to "upgrade" back to Platinum. Its offer? 75,000 Membership Rewards points for incredibly modest spend ($6,000 over the first six months I have the card again).
Those 75,000 points, using my penny-a-point guide, are worth $750. And that's not a fake perk. Amex has to buy those points from whatever airline I would select as a transfer. I trust they're spending about $750.
So because they would not give me a lousy $50 good-will concession on my 2020 annual fee, they are out $600 in fees these past two years. They will now pony up $750 worth of points to get me back. That is $1,350 in lost revenue and hard-cash expenditures.
Like I said, the credit card gods must be crazy. And they know they're crazy.
I called a friend at Amex on Tuesday when I got the offer. He was the same guy who told me back in 2020 that Amex rarely discounts an annual fee. "It's just something we hate to do," he explained then. "It's not in our DNA."
What does he say now about the $750 offer to come back? Isn't that much worse than a $50 concession on the annual fee? What DNA says sacrifice $600 in fee revenues, then spend $750 more to get back a customer lost over $50?
"This is 2022, not 2020 and we're making different decisions," he said. "From your standpoint, I could see where it seems crazy."
For the benefit of Mr. Kite, let's dispense with the age talk this week. No one wins in that conversation. Instead, let's zero in on the credit-card-gods-must-be-crazy angle because it offers ripe fodder for the craziness of life on the road. Really, fellow travelers, we're not the crazy ones, they are. I can prove it.
You have read in recent days from JoeSentMe's least sentimental contributor, Bob McGarvey, about why he's stuck with Amex Platinum throughout the pandemic. In a nutshell, even with the recent fee bump to $695 a year, Bob says he's ahead nearly $500 based on the card's perks, promises and frills. Good for Bob. I like it when the good guys win--and live to blog about it.
Me? Not so much. My tale of Platinum is much crazier--and may reflect your Amex experience. It may even cost American Express more than $1,300 in real dollars--not perks or the chimera of promised frills--if I "upgrade" from Amex Gold and rejoin the Platinum parade from which Amex made it so easy to depart two years ago.
At the beginning of the pandemic in 2020, my American Express Platinum card came up for renewal. I'd held a Platinum card since its 1984 debut. Like most smart observers of the card market, I frequently made the case that it was the one card to rule them all if you traveled frequently. With grants of status (automatic Hilton Gold and Marriott Gold plus National Executive), a $200 airline-fee statement credit, airport club access via Priority Pass Select and its growing network of Centurion Lounges, the $550-a-year card basically paid for itself if you lived your life on the road.
But there was no life on the road in 2020. Even at the start of the pandemic, we knew 2020 would be a lost cause and 2021 was, as they say, an unknown unknown. It occurred to me that maybe, just maybe, $550 was a little rich for a card that was going to be essentially worthless to travelers who were not traveling.
So I did what I thought was the prudent thing. I called Amex and said: I'm a cardholder for a long time--"Wow! You've been a member longer than I've been alive!" blurted out the startled Amex rep--and I feel I deserve some sort of break on the annual fee.
Startled young rep promptly lapsed into embarrassed silence. Then, the answer: Nothing doing. Not a pound, not a penny, not a soo--and certainly not the $50 concession I was asking from Amex.
"You can't see yourself reducing the annual fee by 9% to save a [then] 45-year relationship?" I asked.
"I'm sorry, sir," she said. "There's really nothing I can offer you."
I then did the time-honored thing: Hung up and called again. Different rep, same answer, Same for a third call.
I responded rationally. I cancelled my Platinum Card--and had my wife do the same thing when hers came due. She busted down to a Green Card (annual fee $150) and I demoted myself to Gold, which costs $250.
I won the game in 2020: I flew nowhere, Hilton and Marriott automatically extended the status level the Platinum card once conferred--and I saved $300 in fees.
I won the game in 2021, too: I did fly, but all of my travel was in international business class (free club admittance, of course) or to and from domestic destinations where Amex club entry was irrelevant because member lounges were still shuttered. Hilton and Marriott automatically extended my elite status again, too. And I saved another $300 in fees.
Six hundred bucks to the good so far. But I knew 2022 would be different. I still have my freebie elite status from Hilton and Marriott, but I will be flying a lot more and I need extensive club access. So I went out and got myself the Capital One Venture X card. It comes with Priority Pass Select, its fee is lower ($395) than Amex Platinum (or Chase Sapphire Reserve), I'm getting a 100,000-mile acquisition bonus and I've already cashed a $200 vacation-rental statement credit. Since I value credit-card points at a universally low one penny, my $395 annual fee will be offset by at least $1,200 in travel rewards plus whatever club entry fees I won't have to pay.
Like I said, the credit card gods are crazy, but at least I know why Capital One is being so generous. This is its first play for high-value, high-spend customers and it needs to make a splash. Now we can question whether having us high-travel rollers in the fold will profit Capital One--Chase took tens of millions in losses when it introduced Sapphire Reserve and its brand extensions seem both pointless and profitless--but at least we know what Capital One is thinking.
American Express? No so much. On Tuesday, I received a glossy, expensive, black-and-silver promo mailing from Amex. It wants me to "upgrade" back to Platinum. Its offer? 75,000 Membership Rewards points for incredibly modest spend ($6,000 over the first six months I have the card again).
Those 75,000 points, using my penny-a-point guide, are worth $750. And that's not a fake perk. Amex has to buy those points from whatever airline I would select as a transfer. I trust they're spending about $750.
So because they would not give me a lousy $50 good-will concession on my 2020 annual fee, they are out $600 in fees these past two years. They will now pony up $750 worth of points to get me back. That is $1,350 in lost revenue and hard-cash expenditures.
Like I said, the credit card gods must be crazy. And they know they're crazy.
I called a friend at Amex on Tuesday when I got the offer. He was the same guy who told me back in 2020 that Amex rarely discounts an annual fee. "It's just something we hate to do," he explained then. "It's not in our DNA."
What does he say now about the $750 offer to come back? Isn't that much worse than a $50 concession on the annual fee? What DNA says sacrifice $600 in fee revenues, then spend $750 more to get back a customer lost over $50?
"This is 2022, not 2020 and we're making different decisions," he said. "From your standpoint, I could see where it seems crazy."