Last week I’ve mentioned that Amex has added some pretty strong verbiage to their “T and C” on credit card applications. I don’t have any problem with banks trying to make money. They are a business, after all. Admittedly, me and Amex have not been on “simpatico” terms for a while. If you are a new reader, I can’t get into any details as to why. I will only say that recently, our relationship has improved quite a bit.
Either way, the purpose of the post is not to bash American Express, but rather provide feedback in hopes that the rep who reads my blog will pass it on to the relevant department (rather unlikely given the small scale of my site, but worth a shot). It’s in my best interest to see Amex give Chase a run for their money. Why? Competition among banks is good for consumers and tends to increase sign-up bonuses.
I will be the first one to admit that I’m not the type of a customer Amex should be after. Heck, I wouldn’t want me. But I am a regular mom and consider myself to be somewhat of an expert on credit cards. Plus, I deal with normal folks enough to know what works and what doesn’t.
So, here is the list of five suggestions, in no particular order, and occasionally addressed to Amex:
1) Don’t go “Anthony Scaramucci” on your potential customers.
Cue Italian New Yorker accent:
“If you apply via leaked credit card links, we will confiscate your points. All of them. Man, we just want to find and kill the leakers. Oh, you didn’t know it was a targeted offer when you applied? Well, you should have known. Next time, ask us and we’ll let you know what links are acceptable and which ones are not. Just don’t expect us to stand by that answer because we are not responsible for what underpaid and undertrained reps in India may tell you in the online chat. Unless it’s to our advantage.
Basically, just apply for inferior links on our website and you will be safe. Oh, you think it’s unfair that some can get a better offer elsewhere? Too bad. We took the sign-up bonus from one guy today, and will take it from three more tomorrow. And you better re-elect, err, renew your credit card for the next five years or we’ll CONFISCATE ALL OF YOUR POINTS.
American Express and its customers are like brothers, similar to Cain and Abel. In short, we will be thrilled if you apply for one of our credit cards. What say you?” ( A note to readers: I’m not trying to inject politics into my blog, but merely using recent colorful events for comedy material).
First impressions matter, right? I don’t know who drafted the latest “genius” amendment to terms, but it really stinks. Amex, are you trying to scare off potentially profitable customers? Because it’s working. But don’t take my word for it. Here is a comment from reader Cheapblackdad:
There you go. This upstanding black citizen got spooked by your over-the-top threats. You lost him, maybe forever. He puts considerable amount of spending on credit cards each month, and now Chase will have it all. Once again, I understand why Amex wants to get rid of potentially unprofitable customers, it’s just that they are cutting off the nose to spite the face. There is plenty of competition in US, people will simply take their business elsewhere.
2) Launch a card that is a crossover between Chase Freedom and Chase Freedom Unlimited.
This one is a must. Amex can’t just be as good as Chase. It has to be better. Their cards are still not accepted everywhere, which is a major strike against that bank. Sure, they have great purchase protection and various lucrative offers in online profile. But it’s not enough.
American Expresss has some great everyday cards, like Amex Blue Cash Preferred and Amex Everyday Preferred (read about them here). However, there is one major problem. Both have annual fees. Many normal families will skip the cards for that reason alone. Yes, the products are worth the fee, but it’s a matter of perception. Annual fee=deal breaker for regular family.
That’s why most of my friends and relatives have Chase Freedom, and few have applied for Citi Double Cash. They like the idea of 5% categories and 2% cash back on everything. Simple is good for busy folks. Amex needs to create a no-fee card that earns 5 points on rotating categories and 1.5 points on everything else. Also, make it automatic, so folks don’t have to worry about registering. Oh, and no minimum number of transactions requirement, as is the case with Amex Everyday Preferred. Simple is best.
In order to contain costs, cap 5% categories at $1000 in spending per quarter, compared to $1,500 on Chase Freedom. Most normal people will be quite happy with that limit, and savvy hobbyists won’t bother with such a puny amount. Double win. Earning 1.5 points on everything is the new standard these days. Go any lower, and people will simply switch to 2% cash back.
And there you have it: a great card for an average Joe, and a viable competitor to Chase Freedom/Freedom Unlimited combo. Every three months, like clockwork, miles and points blogs will announce new 5% categories. Boom. Free publicity for the card.
Name it Everyday Simplicity card from American Express. You are welcome.
3) Make it possible to pull points between various MR and cash back earning cards.
It’s time. Amex, you will not be able to beat Chase unless you make the points fluid. Turn Amex Blue Cash Preferred into a point earning product and allow the ability to transfer points to MR earning cards on 1:1 basis. Also, adding the ability to combine the stash with that of your spouse or domestic partner is a must. Even Citi lets people share points for free. Come on, Amex! You definitely don’t want to be a second fiddle to Citi.
4) Make few much needed improvements to Membership Rewards program.
Membership Rewards program is second only to Ultimate Rewards, IMHO. I wrote a comparison post awhile back with the latest updates. For some families, in fact, MR program is better. Namely, folks who like to fly Jet Blue and who live in Delta hubs. But that doesn’t describe the majority of people, and there is no way around the fact that Southwest and Hyatt are two of the most lucrative UR transfer partners. The ones you can’t get anywhere else.
Amex can’t steal those from Chase, so they need to overhaul their own program. Few suggestions:
1) Make transfer to Hilton 1:2.5. The ratio of 1:1.5 simply doesn’t cut it. Lack of decent hotel transfer options is the achilles heel of Amex. You can usually buy Hilton points for around 0.5 cents apiece via various promos, so by that logic, using valuable MR points with the current transfer ratio gives you less than one cent per point. That’s ridiculous. Amex, you are now the sole issuer of Hilton cards, surely you can negotiate a better deal? IMO, 1:2.5 is a bare minimum exchange rate, comparable to 1:1 UR/Hyatt ratio. An occasional transfer bonus won’t hurt either.
Hilton hotels are everywhere, and regular families are more likely to drive than fly.
2) Make it possible to redeem MR points at 1 cent apiece. In all likelihood, most people won’t take advantage of this option. But it’s nice to know that it’s there if you need it. Having 1:0.5 ratio is simply unacceptable. Oh yes, but various gift cards you can get on 1:1 basis! Not good enough. You can buy many of them on Giftcardgranny at a substantial discount. Plus, you can’t pay power bill with gift cards to Carrabba’s etc.
Few months ago I cancelled my Amex Green card that earns Membership Rewards. I didn’t want to transfer 10,000 remaining points to miles speculatively, so just dumped them to Plenti program 1:1. Then I used the stash at Winn-Dixie for a $100 discount. To me, it was almost as good as cash, but it was still a hassle. Plus, not everyone can utilize Plenti program as efficiently as I did.
3) Make MR points worth at least 1.25 cents toward ALL travel, similar to Chase Sapphire Preferred. Once again, a long overdue change. You won’t be able to compete with Chase unless you do this, Amex. In fact, why not make each MR point worth 1.35 cents? That’s still a modest return in value compared to 2% cash back cards, and it will give consumers another option.
All in all, MR program definitely has its strengths (like plethora of airline partners and instant transfer to most of them), but few tweaks would make it much more attractive to an average Joe.
5) Overhaul Amex Platinum and turn it into a viable competitor to Chase Sapphire Reserve.
Amex Platinum is the “cream of the crop” product, designed to lure a lucrative segment of high-spender/business travelers. Every bank is salivating at the prospect of cornering the market on this one. But it comes at a steep price. Business travelers are usually very savvy, and demand maximum rewards and benefits in exchange for their patronage.
What Amex seems to forget though, is that business travelers are just “average Joes” at heart. They want to keep it simple, so they can instead focus on spending time with their family. They are already super busy and overwhelmed due to their demanding jobs and travel schedule, and don’t want to worry about taking advantage of expiring Uber credit each and every month. They also would prefer a straight travel credit each year rather than archaic allowance towards incidentals on ONE designated airline. Amex, get rid of this ridiculousness already.
Chase Sapphire Reserve is crushing it because it’s simple and straightforward. It also currently allows you to bring all of your travel companions (not just two) to Priority Pass airline lounges. Business travelers take vacations with their family just like average Joes, and many have more than one child.
Sure, some changes to benefits on CSR are probably inevitable, and Chase is even starting to float the idea of cutbacks (read the post on Doc) But they would have to seriously gut the card before Amex Platinum started to look better by comparison. Yes, some people will benefit from the latter, sure. Premium card market is not “one size fits all.”
But overall, CSR is designed for a savvy business traveler who likes to keep it simple. A top notch product. Amex has to make much needed changes or lose the segment entirely to Chase and Citi. Citi Prestige may not be as hot as it once was, but it’s still a decent premium card, ahead of Amex Platinum in many respects. Not to mention, 75k points bonus is getting a lot of buzz.
I don’t claim to know the ins and outs of the banking industry. Obviously, it’s a delicate balance. Give too much in rewards, and there won’t be any profit to speak of. Give too little, and other banks will eat your lunch. However, American Express needs to overhaul its brand ASAP. They can’t seem to attract normal folks and business travelers are defecting to Chase in droves. It’s time for a change in direction. Your move, Amex.
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.