When we talk about credit card points and miles, the first issuers that come to mind
are usually American Express and Chase.
While there are a lot more issuers in the game today than there were ten years ago,
there are compelling reasons why these two issuers continue to dominate the award travel
space.
Hey, how’s it going everyone?
It’s Ernest from Trip Astute.
In this video, we’ll cover why American Express and Chase are the two issuers that
are hard to ignore in this hobby, and what that means for those of you starting out in
points and miles, as well as those who have been pursuing award travel for a while.
One question that I often receive is “why don’t you talk more about US Bank and Citi
cards?”
One of the reasons is that I usually don’t like to review cards that I don’t have,
or have had in the past.
While I could review the benefits on the website, I think it’s helpful when I can show how
things work on the backend and give first-hand experience on the cards.
Maybe I’m too picky, but I just prefer to show screenshots of the interface and even
what the card looks like in person.
But there’s also a bigger question that comes to mind, which is, why is it that most
of us gravitate toward American Express and Chase.
So in this video, I’m hoping to explore why most of us in this space are focused on
these two issuers.
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and more enjoyable.
Traveling can be stressful and expensive, so we’re looking for ways to help you maximize
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I want to start out by saying that this video isn’t meant to put down other issuers.
There are a lot of compelling cards on the market right.
And there is no “one size fits all” strategy when it comes to cards and issuers.
But we can’t ignore that American Express and Chase continue to dominate the space,
which is why I came up with this video topic.
So, let’s run through the list.
1.
Longer history in the game: American Express has a very rich history when it comes to travel.
They actually started as a freight forwarding company in 1850.
They then started to innovate in the travel space by offering traveler checks in 1891.
By 1895, American Express had offices around the world to help travelers, especially those
that found themselves stranded.
Even in 1914, American Express was credited with helping Americans who were stranded in
Europe due to World War I with getting themselves and their belongings home.
In 1958, they introduced their first charge card, followed by the corporate charge card
in 1966.
Since then, they’ve built a portfolio of cards that earn Membership Rewards points,
and even featured celebrity endorsements.
For those of you that grew up in 1980s and 90s, you probably remember the American Express
ads featuring the slogan, “don’t leave home without it.”
American Express was extremely successful at marketing their brand as essential for
travelers, but also creating a sense of luxury and exclusivity that elevated perception of
the brand.
Chase, on the other hand, introduced their Sapphire and Sapphire Preferred cards in 2009.
At the time, they were the underdog entering to battle the premium rewards offered by American
Express and the more popular cashback cards that existed at the time.
They also tried to create a sense of luxury and exclusivity, and surprisingly, the rewards
offered at the time were nowhere near as lucrative as they are now.
But you have to also factor in what was happening in 2009.
The US was starting to recover from a recession, so with household incomes starting to stabilize
again and a job market on the rise, it seemed like a perfect time to target new customers
looking for more rewards and perks.
It’s this history and experience in the market that helped American Express and Chase
become the two dominant players in the market, and one of the big reasons that they continue
to have a strongest presence in award travel.
2.
Focusing on specific customer segments: One of the ways that American Express expended
their presence was their focus on business travelers.
I know a lot of you have or have had American Express Corporate cards.
In fact, when I joined my first consulting firm after grad school, I was issued an American
Express Corporate card for my business travels.
What I didn’t realize at the time was that I could access the points that I was earning
on the Corporate card if I had personal cards that were also linked to my account.
I’ve heard that a lot of companies have restricted this practice now, but at the time,
it encouraged me to have and use American Express cards in my personal life as well.
Chase, on the other hand, hasn’t had as strong of a presence in the corporate space.
However, their Sapphire Preferred and Reserve card ended up having a strong appeal to millenials.
In fact, when the Sapphire Reserve was released, there were a lot of influencers who were unboxing
their cards which added to the allure.
It also didn’t hurt that the card included a 100,000 point welcome offer, which created
a bit of a frenzy.
The high volume of applications caused a shortage of metal cards, and resulted in Chase reporting
a financial loss.
Whether it was intentional or not, Chase’s Sapphire brand became a more hip and modern
alternative to American Express, which traditionally focused on more mature, professional, and
wealthier demographic.
3.
More established travel partner relationships: One of the big factors driving the growth
of American Express and Chase travel rewards is their relationship to other travel companies.
Both companies have been able to establish exclusive and non-exclusive relationships
with some of the largest travel brands in the airline and hotel space.
While Citi and Capital One have also gained a lot of ground in their partnerships, it
does seem like Chase and American Express have really worked hard to maintain and grow
these partnerships.
Having a diverse set of partners gives their programs strength as well since cardmembers
are able to find more options to redeem their award travel, even if they have to book partner
flights.
4.
Multiple card options: The traditional way of earning points and miles was to be loyal
to a specific brand in order to gain points.
Both American Express and Chase offer several cards that support their flexible points program,
which gives cardmembers the ability to earn points at a faster pace.
I know that other issuers like Citi also have multiple cards that earn points too, but I
would argue that Chase and American Express still have the upper hand when it comes to
multiple card options.
It’s the reason why you’ll often hear people in this hobby reference a trifecta
or quadfecta set-up.
These are essentially a combination of cards that can earn you points through a variety
of bonus categories, which then allows you to earn more points in your award program
currency.
5.
Committed to the game: This is probably the most controversial point that I’ll make,
and of course, it’s purely my opinion.
I think that there’s a sense in the travel rewards community that American Express and
Chase are in this to win.
This is really apparent when you look at the way that both companies have tried to innovate
to capture customers for the long-term.
As I mentioned earlier, Chase posted a loss after they introduced the Sapphire Reserve.
They underestimated the popularity of the card, but rather than cutting it off from
their lineup, they’ve kept it open for new applicants while reducing the welcome offer
and stripping some of the non-essential benefits.
Of course, they also increased the annual fee in early 2020, which angered a lot of
folks in the community.
I was also disappointed by the annual fee increase, but after doing the math, the card
still seems to provide value even using fairly conservative numbers in my assumption.
If you want to see the breakdown, check out our video called “Is the Chase Sapphire
Reserve Still Worth It?”.
I even have a Google Sheet that you can use to follow the same calculations and methodology
to determine whether the card is worth keeping based on your lifestyle.
American Express has constantly evolved their line-up of charge cards.
Specifically, in 2018 we saw the revamp of the Gold card and in 2019, the new Green card.
American Express has also added more traditional credit card products to their line-up which
earn Membership Rewards points.
I would argue that both of these companies have been less aggressive when it comes to
cutting back cardmember benefits as well.
For example, in September 2019, Citi cut several of their key travel benefits on their cards.
From a numbers perspective, it probably didn’t make sense for Citi to keep those benefits
active due to low usage.
This likely didn’t affect casual users, but it alienated the more hardcore fans of
their ThankYou Rewards program, especially those that travel frequently and rely on these
benefits.
Also, the Citi Prestige, which is a competitive premium travel rewards card has been unavailable
at times for new applicants, and even had some of its key and unique benefits removed
when it was relaunched in early 2019.
That’s no to say that Chase and American Express haven’t cut their benefits either.
For example, The American Express Priority Pass benefit on the Platinum card used to
include the restaurant credit, though one could argue that the larger network of lounges
included with the card makes up for the difference.
On the Chase side, those of you that had the Sapphire Preferred early-on might remember
that the card used to award a yearly dividend of 7% on all points earned at the end of the
year.
And while Chase recently increased the annual fee on the Sapphire Reserve, they didn’t
actually take away any of the benefits.
Instead, they added new benefits, which I know help some folks but not all.
While other issuers are often coming out with generous rewards structure and perks, I tend
to view them with a bit of suspicion.
I think a lot of us have seen cards with rewards that seem “too good to be true”, only
to have that sentiment confirmed when the rewards are changed.
Again, the first thing that comes to mind is the fourth-night-free perk on the Citi
Prestige card.
That perk continues to be more and more restricted, which has annoyed many in the travel community
who shifted their card set-up to maximize this benefit.
So, this all ties back to the original question that I posed at the beginning of the video.
What don’t I talk more about cards like the US Bank Altitude Reserve or Citi Prestige?
It’s because I’m not convinced that either issuer is as committed to the game as American
Express and Chase.
That may change in the future.
In fact, I think it’s healthy for there to be more competition in this space.
But for now, if you’re into the points and miles hobby, it’s hard to ignore American
Express and Chase, and their influence and history in the award travel space.
At least for me, I feel more confident using and recommending their credit card products
since they seem to be committed to travelers.
What do you all think of American Express and Chase?
Do you agree or disagree with my assessment that they dominate the award travel space?
I’m curious to hear your thoughts and experiences in the comment section below.
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