Why Amex Likes The Chase Sapphire Reserve

Filed Under: Credit Cards
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The credit card industry is more competitive than ever before, with issuers constantly introducing new industry-leading cards. It’s amazing to see the pace at which cards have been improving.

Back in the day a 2x bonus category was impressive, while nowadays you can earn 2x points on everyday purchases, and 5x points with some bonus categories.

The Sapphire Reserve Was The Start Of An Era

Arguably the Chase Sapphire Reserve® Card was a turning point in the credit card industry. It’s an incredibly well rounded premium credit card, and in many ways was a premium credit card for people who wouldn’t have otherwise considered premium credit cards.

The card has a $450 annual fee, but offers so many incredible perks — 3x points on dining and travel, a Priority Pass membership, great travel coverage, flexible points, and more.

There’s talk about whether Chase will ever make money on the Sapphire Reserve, given how rewarding it is, and given their high acquisition costs. Chase met their 12 month sales goal on the card in the first two weeks it was introduced. The card was so popular that they ran out of the metal required to make the cards.

You’d think that this card would be one that other card issuers strongly dislike, but that’s not the case… at least that’s what Amex is claiming.

Why Amex Is Grateful For The Sapphire Reserve

When it comes to the credit card “race,” an American Express executive has some interesting things to say.

Doug Buckminster is Amex’s President of Global Consumer Services. He claims that Amex initially lost customers when Chase introduced the Sapphire Reserve in 2016, but says that he’s actually happy they introduced the card.

Why? The Platinum Card® from American Express has seen a 60% increase in growth after adding new benefits a couple of years back, and more than half of new Platinum cardmembers are under the age of 35.

As he explains it:

“It actually did us a service. It really intensified interest in the premium payments category. Suddenly everybody was talking about high-fee credit cards that have lounge access and rich benefits.”

So basically the Sapphire Reserve ushered in a new era for premium credit cards. I do find this interesting, though. While I like both the Sapphire Reserve and Amex Platinum, I view the cards as going after different consumers.

The Sapphire Reserve is actually a good card to use for everyday spending, while the Amex Platinum doesn’t have bonus categories that are as useful, and rather that card is all about the perks.

Is Chase Just Copying Amex?

The above I can see the logic of, though Buckminster makes another interesting claim. He says that Chase is 18 months behind Amex on things, saying that Chase is:

“Staffed by a whole bunch of Amex alums who at least know our historic playbook and I always assume are 18 months behind whatever feature or functionality we introduce. They’re going to show up with a knocked-off version.”

That’s quite a statement.

Interestingly at this point I almost feel like the pattern is opposite — not that Amex is copying Chase, but rather that I think Amex has been refreshing their products more recently.

Chase has had an incredible lineup of cards, though in the past few years they haven’t made many changes to them. The Sapphire Reserve continues to be compelling, their Ink Business Preferred℠ Credit Card is an industry-leading business card, and the entire Chase Ultimate Rewards ecosystem is awesome.

But I’d argue that it’s within the past 12 months that Amex has been refreshing their portfolio, so I’m not sure I’d agree that Chase is 18 months behind Amex here. Quite to the contrary, I think Amex is getting more attractive due to recent changes, so the timing seems opposite to me:

Bottom Line

It’s always fascinating to see how credit card issuers view the competitive landscape. I believe that Amex may have benefited from the introduction of the Sapphire Reserve, as it makes sense that it increased interest in the premium card market.

However, I absolutely don’t think Chase is 18 months behind Amex, even if it’s true that Chase is getting a lot of ex-Amex employees. When you look at the products they’ve introduced, Chase has done refreshes before Amex. Arguably that puts Chase at a disadvantage, since Amex is able to one-up them with some of their recent card refreshes.

What do you make of these statements by an Amex executive?

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Comments
  1. The AMEX executive’s two claims actually contradict each other:

    a) We love Chase because they *led* and showed us the way into millennials’ hearts…
    — “It actually did us a service. It really intensified interest in the premium payments category. Suddenly everybody was talking about high-fee credit cards that have lounge access and rich benefits.”

    b) Chase is actually playing catch-up to us…
    — “Staffed by a whole bunch of Amex alums who at least know our historic playbook and I always assume are 18 months behind whatever feature or functionality we introduce. They’re going to show up with a knocked-off version.”

    So, which is it? The answer is the a) is likely true and b) is wishful thinking.

    The Sapphire spooked the competition, which has since been introducing (and pulling) benefits pêle-mêle, trying to replicate the big “boom!” heard around the Rewards CC universe after the CSR’s norm-shattering launch. Nothing I’ve seen so far has come close. The huge benefits that the competition has been introducing (and often then pulling — Citi Prestige, that’s you) have generally come with strings attached that made them seem like half-hearted offers. With the CSR, there are so few restrictions that it seems like Chase actually wants you to access and enjoy the card’s benefits. The $300 statement credit is a cinch to take advantage of because another feature of the card: broadly defined categories of ‘dining’ and ‘travel.’ Therein lies the difference and why the CSR remains the card to beat, in my book.

  2. One thing that is indisputable, Chase’s card portfolio, previously the leftover wreckage of First USA, only took off after Chase hired away nearly the entire Platinum AmEx team, by offering very lucrative paychecks.

  3. @DCS, are those two things really mutually exclusive? CSR copied the formula around a high fee card sort of like the AMEX and did a better job selecting benefits / marketing the card and so the CSR saw a huge explosion. And with people talking about these high benefit high cost cards it brought more people into the space that would then also consider the AMEX Plat, hence also boosting that cards numbers.

  4. Definitely agree with the logic that the CSR started a conversation and a market for premium cards within younger people that AMEX wasn’t able to initiate, but that ultimately helped AMEX when people already felt comfortable looking for a premium credit card.

  5. AMEX isn’t leading anything. For one, it’s not widely accepted. For places where it IS accepted, you’ll often get a sneer from the merchant when using it (because of the higher fees). The FOREX fees when using the cards overseas is a killer. In my personal experience, customer service at AMEX has been a series of trainwrecks….too many negative stories to list here. The whole RAT team thing, clawbacks of rewards, etc, etc, are a big disincentive to ever consider them. A message to the AMEX CEO, a good rule of life is to never believe your own bullsh**. Good luck and good riddance to them. Never going back.

  6. Up until this year, I have been using the trifecta from Chase:

    CSR: air travel, local transit, rental car and dining and 3x
    Freedom: bonus categories at 5x
    Freedom Unlimited: non-bonus
    Hotel Spend: Hyatt card

    Since the refresh of both the Amex Gold and Platinum:

    Gold: All dining and grocery at 4x
    Platinum: All airfare

    Given that the majority of my monthly spend fits into the Amex categories, I’ve seen a huge shift to Amex. I travel nearly every week for work, so I probably spend an average of $50-75K across my cards. That’s no small dent. I’m curious to see if Chase responds.

  7. It doesn’t matter how or why Chase got better in the card business, only that it did so legally.

    And as FF78, stated, the problem with AMEX, and it will most likely always be an anchor to them, is the lack of acceptance, especially internationally. In my entire life (unfortunately I’m in my 50s now), I’ve never had a merchant not take Visa or Mastercard, but with AMEX and Discover (and when it was possible to get it, Diners Club) that does happen.

    I like AMEX points but there is no way I would say its Platinum card is close or better than the CSR. The credits are often difficult to use (Uber spread out $15 chunks, airline credits often useless) unlike the simple $300 credit given by the CSR.

    I’ve also always had better service calling the CSR phone number than I have with AMEX.

  8. While the increase in category earning for Amex is nice, the higher annual fees and yearly credits that range from highly situational to nearly worthless turn me off. I wouldn’t even complain if the Gold and Platinum airline credit was a straight statement credit only for your selected airline, which is still far more restrictive than the CSR credit. But with the current implementation of only covering bags, seat selection, and change fees, it’s just a pain. And that’s not even getting into the Grubhub and Saks credits. It’s like the Amex product developers were just throwing darts at a board to pick the new benefit to add to their cards.

  9. ADJ sez: “@DCS, are those two things really mutually exclusive? CSR copied the formula around a high fee card sort of like the AMEX and did a better job selecting benefits / marketing the card and so the CSR saw a huge explosion.”

    The facts and the AMEX exec speak to what the launch of CSR represented, not I. The AMEX exec is clear about what the CSR has done for their cards, and @Lucky did state what happened after the CSR launched: ” Chase met their 12 month sales goal on the card in the first two weeks it was introduced. The card was so popular that they ran out of the metal required to make the cards.”

    An imitation that is much, much better than the original is hardly an imitation. It is a pioneer or trailblazer! In fact, what the competition, including AMEX, has been trying to do since the CSR’s seismic launch is to imitate it and replicate its success!

    The claims are provided side by side and they seem mutually exclusive as I understand them.

  10. IMO, the Amex Platinum is sub-standard compared to CSR.
    CSR:
    $450 AF
    $300 very generously defined “Travel” credit
    GE/TSA credit
    Not counting PP
    If you use both credits (for GE) the first year, the AF is like $50 (I know not exact).

    Amex Platinum:
    $550 AF
    $200 very narrowly defined Airline credit (to the point of being useless, IMO)
    Not counting lounge access
    GE/Tsa credit
    Let’s assume you use both GE and travel credit:
    puts your 1st year AF at $250

    No thanks.
    Amex needs to upgrade the Airline credit to $300 “Travel” credit like CSR, IMO to even begin to be competitive.

    That being said, for the SUB, maybe, but then again, perhaps I’m in the minority.

  11. For me, one defining choice of picking CSR over Amex Plat or Gold is the x1.5 points on travel redemptions. Sorry, I just don’t value UR points or MR points as 1.7x to 2.0x or more as some other guys would, just because I don’t redeem for business class or 5-star hotel rooms.

    Another plus that CSR has is the UR ecosystem – CSR/CF/CFU is a pretty strong earning trifecta; AMEX can have a similarly strong earning but at around double the annual fee.

    Generous travel credit, priority pass, primary rental insurance is just gravy.

    These are the opinions of someone who cares about earning and using points just as much as getting travel perks.

  12. Obviously he has to put a positive spin on it, but it’s perhaps most interesting that he’s talking about this at all. It has a very “Coke deigning to acknowledge that Pepsi even exists” feel of desperation to it.

  13. Millenial here. I have both cards. I called to cancel my Amex this year because its value has been limited for me and they waived the fee. I haven’t considered cancelling my CSR, so which product is “behind and outdated” again sir?

  14. @Bgriff sez: “It has a very “Coke deigning to acknowledge that Pepsi even exists” feel of desperation to it.”

    My thinking exactly! Chase is the company that AMEX hates to love (as opposed to loves to hate)… 😉

  15. I just hope that the landscape for CC rewards remains competitive between the two of them since Citi appears to be pulling back so much.
    CSR is my goto “Premium” travel card. Better insurance and benefits than the AMEX Platinum, with much better earnings. Effective annual fee is much better as well since all the platinum credits are pretty much worthless. $550 for Centurion Lounge access is not worth it to me in any way.
    Most of my monthly recurring expenses (utilities, etc) goes on Freedom Unlimited for the 1.5x.
    However I have moved most of my other spending to AMEX over the last couple years due to the refresh of the Gold and now Green card making it very solid for me since most of my spending is groceries and restaurants. Now just need one of them to put a decent multiple on gasoline.

  16. “since Citi appears to be pulling back so much.”

    Is Citi pulling back so much? I mean you can now get 2x points with their Double Cash card and are have been adding transfer partners.

    I agree the benefit cuts on the Prestige are a bummer, but I don’t see signs of them pulling back.

  17. @CK sez: “Most of my monthly recurring expenses (utilities, etc) goes on Freedom Unlimited for the 1.5x.”

    Like you I put a lot of spending on the Chase Freedom Unlimited. However, if some of your recurrent expenses include internet, cable or phone service, you might wish to consider adding the *no annual fee* Chase Ink Business Cash, which awards 5x for those items. I have been making a killing since those are some of my biggest recurrent expenses. Along with the CSR, it is the perfect Trifecta, IMHO.

  18. @DCS: They’re not contradictory. One talks about what Chase did, the other talks about what Chase is doing. “Thank you for leading and showing us the way. We copied your strategy, raced ahead of you, and now you’re the one playing catch-up.” It’s not accurate, but it’s logically consistent.

  19. Primary reasons for CSR vs AMEX PLAT
    1. Travel protection benefits
    2. PRIMARY rental car insurance
    3. Useable airline credits. (I don’t pay for bags!)

  20. Before CSR, we had the Citi Prestige.

    Amex Platinum includes Delta lounge access and Priority Pass, so Citi Prestige gave AA lounge access and better Priority Pass. Citi also gave 1.6 cents per point toward AA tickets, 4th night rebates, good travel insurance, and free golf. But City has discontinued every one of those benefits except a near-useless version of 4th night, and the Priority Pass with limits on when and where it can be used.

    It was Citi that deserves the credit for broadening the premium credit card market, but also Citi that has led the way in eliminating benefits.

  21. Like most everyone else, I agree to point one and disagree with point two.

    Chase created a card with rewards it was confident in, and has watched AmEx try to fit their rewards around it.

    I love it, because it definitely benefits me. I got an AmEx Gold because of the 4x.

    One unfortunate thing for me, I have a Chase trifecta and AmEx Gold and Gold Delta so my points are more spread out than I’d prefer. I’d be happy if one of these guys made it easier to pick a team.

  22. Doesn’t sound like the under 35 crowd who are their customers are very bright. Unless someone has a lot of airfare spend I think the amex plat card is pretty garbage with all the changes they made to it. Its a shame I was going to keep it and then it became extremely difficult to use airline credits, marriott gold status became pretty useless, I got tired of having to pre select my airline and be locked in, the PP membership became weaker than Chase’s and I rarely fly delta. All this with an increase in AF? Seems like a very niche card whereas the CSR is actually pretty useful. Don’t get me wrong some of the other amex cards like the gold card or business blue plus are my main spend cards, but the plat card just doesn’t have the benefits to justify the spend vs the CSR that will give some of the same benefits but also have useful travel credits and bonus categories. Maybe amex is just getting all the under 35s that Chase rejected for the CSR. Wouldn’t surprise me since its easier to get approved for a plat card than a CSR.

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