NEW YORK–Holders of premium credit cards are reportedly paring down the number of such cards they carry after recently announced increases in annual fees, a new report suggests.
The newfound restraint comes after JPMorgan Chase raised its annual fee on its Sapphire Reserve card by 45% to $795 in June, and American Express said in September it was raising the annual fee on its Platinum card by $200.
Three cardholders interviewed by the Wall Street Journal said recent fee hikes prompted them to compare the benefits of their premium cards — in one case, by putting together a spreadsheet — and then focus their spending on one while closing the other, the publication said.
A fourth cardholder told the Journal that he ended up keeping a high-fee card for another year after calling to cancel it and being offered a statement credit in exchange for a specified amount of spending on the card.
Issuers are adding greater sign-up bonuses benefits to their high-fee cards to retain customers, according to the report.
What One Report Found
The report cited a Bank of America finding that less than 15% of cardholders pay more than $250 in annual fees and a J.D. Power finding that those who pay annual fees of $500 or more spend three times more than other cardholders and are less risky because three-quarters pay the card’s balance each month, according to PYMNTS Intelligence.
It also said that Bank of America found American Express’ retention rates went up after previous fee hikes and that J.D. Power found the holders of high-fee cards are generally more satisfied with the cards than other cardholders are with theirs.
PYMNTS Intelligence said its report, “How Consumers Decide Which Credit Card to Pay With,” found that while only one in five cardholders owns a premium card with an annual fee of over $100, they are “incredibly engaged, with more than half making that card their primary payment method.”
‘Most Loyal Shoppers’
“Premium cardholders are the most loyal shoppers, as they are determined to get their money’s worth by using the cards frequently to maximize benefits, and they are more than twice as likely as other cardholders to take advantage of their card’s special offers, according to the report,” PYMNTS said.
PYMNTS noted that when Chase announced changes to its Chase Sapphire Reserve card in June, it said the premium card offers users $2,700 in yearly benefits and focuses on the things that are most important to cardholders, including travel, dining, entertainment and service.
