Why I cut up my Amex card
Earlier this week, I blogged about the American Express plan to create a new card called "The Knot" to attract younger customers. Today I would like to relate my own experience with Amex, and why I cut the knot.
I signed up for the American Express personal "green" card back in the 80s, when I was still in college. It made a lot of sense at the time: I had no other credit cards, and was planning on doing a lot of travel overseas, and needed the insurance that the card offered. The $45 annual fee (which eventually climbed to $55) was worth it, especially for the international travel benefits, such as getting traveller's cheques without fees, getting a replacement card abroad if I lost mine or it was stolen, and having local Amex offices in foreign cities hold my mail.
By the end of the 1990s, however, the value proposition had changed. In terms of international travel, my local bank started offering Amex traveller cheques without charging a fee. I could use my ATM card to withdraw cash overseas in local currency. And the concept of having local Amex offices holding my mail seemed very old-fashioned after I got a Web-based email account.
Additionally, I was able to get a no-fee credit card through USAA, which offered more credit than I needed. Why should I pay an annual fee for a card that I didn't need, and seldom used?
The last straw was in 2002, when I got my bill for that year's usage, which was $55. I had used the card about three or four times in the previous year, mostly at places or websites that didn't accept my USAA Mastercard. What a waste! I called up American Express, and said I wanted to cancel the account. They asked why, and I told them, I didn't like paying $55 per year for a service that I seldom used. The rep offered to cut the next year's fee by $25, but I declined. There was no reason for me to keep the card and I had already spent about $600 in fees -- why spend $30 more?
Fee-based cards are going to have an increasingly difficult time attracting and keeping customers, when there are so many no-fee options available. If you carry a fee-based card -- Amex or other -- could you share with us why you still have it? Rates? Air miles, or other points? It's an "old friend"?
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American Express has a problem: Its cardholders are old. Too old, by their reckoning. According to Robin Sidel in the Dec. 1 Wall Street Journal, Amex execs "acknowledge their customers have been older than 40." What to do? Read
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I still carry a fee-based card (Amex) for one main reason. I must pay the entire bill at the end of the month. No choice. In a world where we must have a credi card (hotel reservations, renting a car and so on), this card makes sense for me. And the annual cost is nothing if I compare it to the interests I used to pay when I used my Master Card (and kept an unpaid balance on it).
Hmmm...American Express is heavily pushing me into a Platinum Card. Annual fee of $395.00. Why in the world would I pay this fee? Well it does come with some terrific perks if you travel frequently such as Access to various Airline Club Rooms, membership in various car rental companies and various other little perks. I don't think I'll sign up though since my travel has been dramatically cut back the past couple of years but I understand why many sign up for it. I may cancel my gold card this year - just really can't justify the $90/year fee for this card and the "perks" don't mean much anymore with competing cards.
Interestingly, I read at www.cardweb.com today that Chase, Citibank and Bank of America control 60% of the credit card market now. I see the days of 0% aribtrage and perks coming to a decline soon!
Good point, Jean-Francois, about using the card to force yourself to pay in full every month. But unlike yourself, I seldom rack up any finance charges on my credit card, so the green card didn't have that attraction for me.
Guest brings up the Platinum Card and the perks it carries. For some well-off people, $400 is not a big deal, especially considering the high-level services it provides like airline lounges. Others may not care because their companies pay card fees.
I should add that my current employer gets me an Amex corporate card, but it almost seems pointless -- while it helps me keep my personal and work-related expenses separate, my company doesn't care how I use it, and I still have to fill out an expense report using receipts (not the Amex bill) to get reimbursed.
I have the AMEX Platinum Card and pay the $395 annual fee for it. Why? Not because of the loyalty to AMEX or the 'wow' factor, but 1) because of the travel perks. I am an avid traveller and I love the Airport Club access and the upgrade to Starwood Gold. Because I am part of the travel industry and fly on agent rates a lot, as well as not being loyal to one particular brand, this credit card really works for me. I'd much rather have the lounge access then be upgraded to first class. Citibank has a better Lounge access deal with it's Chairman card and I'm looking at switching though. 2nd reason is that it forces me to pay everything off every month which controls my spending. It's the only card I carry - it's like a debit card with extra protection. Yeah, the $395 is steep, but there are many other ways I can save that $395 per year- I'd rather be pound smart and penny foolish than vice versa.
Thanks Kira! This confirms that there are different classes of people that the Amex targets; and for the frequent business traveller, paying $400/year for a credit card that gives access to airport lounges and other perks is a worth the cost.
