Barclays Study Suggests Amex Platinum Card Falling Behind Competitors

Barclays Study Suggests Amex Platinum Card Falling Behind Competitors

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American Express recently announced changes to its flagship credit card product.  The Platinum Card ®, which recently began giving 5x points per dollar spent directly on airlines, will now also offer 5x points per dollar spent at hotels when booked through Amex travel, and a $200 annual Uber credit.  The annual fee is rising from $450 a year to $550.

A recent Barclays credit card use study suggests that these changes are still not strong enough to for Amex to remain competitive with Citibank’s Prestige card and Chase’s Sapphire Reserve card.

The Barclays study assumes an average customer earning $150,000 a year and uses government data on average household spending across different categories to estimate which card offers best rewards.

The study suggests that the Amex Platinum card now delivers an effective rewards rate per dollar of 1.48% (up from 1.22%) whereas the Citi Prestige cards delivers 1.78% and the Chase Sapphire Reserve 2.06%.

The Barclays study, in our view, is flawed on at least three levels.  First, it fails to identify how the rewards rate is calculated (for example, while all points are transferable to Singapore, Amex points remain transferrable to British Airways and Delta which may allow a more valuable redemption than Citibank points which are not).  Second, it fails to account for the fact that most cardholders have two or more cards in their wallet and spend according to category bonuses; Amex is arguably more valuable than the other cards to those who travel because of the 4x and 5x categories (Citi and Chase have only 2x and 3x categories).   The use of, say, an Amex Platinum card, coupled with the use of a Chase Freedom Unlimited card (which offers 1.50% cash back or 1.5x transferrable points on a spend that can be worth well over 3 cents per dollar at Hyatt, enables a customer to generate far more valuable rewards than Prestige or Sapphire Reserve alone.  Third, the study fails to take into account other factors, including service and purchase protection.  To many, Amex continues to be the gold standard in purchase protection and in resolving disputes with vendors.

It is, therefore, BestCashCow’s position that, while Prestige and Sapphire Reserve are both very compelling and while Chase has significantly better transfer flexibility than Amex, the Platinum card is an important tool in a strong travel rewards strategy.

See the best cards for racking up travel rewards here.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Comments

  • Jeff Gailor

    March 11, 2017

    The last line says it all. Amex and Prestige points have much less value than Sapphire points. BestCashCow sometimes espouses the fallacy that Krisflyer points are worth more than any other points; Pointsguy and ViewFromTheWing have an even worse fallacy - that people want to fly Etihad and Emirates). Unless you buy into one of these fallacies, Chase points are clearly more valuable.

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