High End Credit Cardholders Not Getting Money’ Wort (WSJ Reaction)

In this video, I want to talk about an interesting article that just came out in the Wall Street Journal with the headline, high-end credit card holders find it's harder to get their money's worth. And the basic argument is that premium credit cards like American Express, Platinum and the Chase Sapphire Reserve are getting more expensive. The benefits are getting more complicated and credit card companies are increasingly closing the little loopholes that people have used to squeeze extra value out of these cards. And you know what? I actually think the Wall Street Journal makes some pretty good points. But I also think there's another side to this, because even with annual fees approaching a thousand dollars, I would argue that these cards can still provide a ridiculous amount of value for the right person. So let's get into it. Hey, credit warriors. Welcome to the show. My name is Ben Hedges, a.k.a. The Credit Shifu. And on this channel, I cover U.S. credit cards, personal finance and luxury travel. If you like the sound of that, do subscribe. But let's get into it. All right. So let's start with the problem. The American Express Platinum now has an annual fee of eight hundred and ninety five dollars and the Chase Sapphire Reserve has an annual fee of seven hundred and ninety five dollars. So we are getting dangerously close to the world's first mainstream thousand dollar credit card annual fee. People were shocked when we got the first thousand dollar iPhones a few years ago. Now we almost have thousand dollar credit cards. And when you are charging someone eight hundred or nine hundred dollars just for the privilege of having a credit card in their Naturally, people start looking very closely at whether they're actually getting their money's worth. And The Wall Street Journal argues that this is getting harder. One person quoted in the article describes the rewards world like this. It's just a forever changing landscape. And I think that's pretty accurate because one of the biggest criticisms of the Amex Platinum isn't necessary that it doesn't offer enough value. It's that getting that value can feel like having a part time administrative job, right? Like Amex itself says the Platinum now offers access to more than three thousand five hundred dollars in annual value. But that value is split across a huge number of different benefits. You have up to six hundred dollars in hotel credits, but they're split into three hundred dollar semi annual credits and require qualifying prepaid fine hotels and resorts collection bookings or hotel collection bookings. You have up to four hundred dollars in resi credits, but that's one hundred every quarter. There's up to three hundred dollars in digital entertainment credits, but that's basically twenty five dollars per month. There's up to three hundred dollars Lululemon credits, but that's seventy five dollars per quarter. Then you've got Uber Cash, Uber One, the airline incidental credit, Clear Plus, Walmart Plus, lounge access and all the other benefits. So, yes, Amex can say, look, there's more than three thousand five hundred dollars in value. And technically, they're not wrong, but nobody should look at that three thousand five hundred dollar number and think, oh, great, I paid eight ninety five and Amex handed me three thousand five hundred dollars. That's not how it works. You have to ask yourself, would I have spent this money anyway? Because if you normally spend three hundred dollars at Lululemon every year, fantastic. That's potentially three hundred dollars of real value to you. But if you've never bought a pair of Lululemon pants in your life and suddenly you find yourself standing in the store saying, well, I've got seventy five dollars Lululemon credit expiring tomorrow. What on earth should I buy? You didn't really save seventy five dollars. American Express successfully convinced you that yoga pants were a financial strategy. And this is really the heart of what people mean when they call the platinum card a coupon book. The Wall Street Journal also highlights another frustration. Amex is getting stricter about how some people use these credits. For example, the article discusses cardholders who'd found ways to use the Platinum's airline incidental credit towards actual airfare through various workarounds. Amex has been closing these loopholes. It also mentions one cardholder who had been using the quarterly Lululemon credit to buy gift cards online, even though gift cards weren't supposed to qualify. That workaround apparently stopped working as well. Now, to be fair to Amex, if the terms say you're not supposed to buy gift cards, I can't exactly accuse Amex of committing some great injustice when they eventually figure out how to enforce the terms. That's kind of like complaining that Costco finally noticed you've been using your brother's membership card for eight years, right? You had a good run, but it's over now. But from the cardholders perspective, every time one of these tricks disappears, the effective value of the card goes down. Then you have the lounges. The article discusses tighter rules around bringing guests into airport lounges, including Amex restrictions. One platinum cardholder interviewed by the journal actually decided that the new $8.95 annual fee was no longer worth paying, saying, I feel like the benefits are kind of going away. And I understand that frustration. Airport lounge access has historically been one of the biggest reasons to get a platinum card, but lounges became victims of their own success. You had more premium cards, more cardholders, more guests, and eventually you had situations where you walked up to a lounge to escape the overcrowded airport terminal and discovered a 45 minute line to enter the overcrowded lounge. Like this experience I had at the Chase Sapphire lounge in Boston, the line was so long, I didn't even bother. And at that point, you might as well just go back to terminal B and fight somebody for a chair near Auntie Annie's. So Amex's argument is basically that tightening guest access helps protect their experience for actual cardholders. And I think there is some logic to that, but it's still a reduction in value if you regularly travel with family or friends. Now let's move to the Chase Sapphire Reserve because Chase is starting to receive many of the same criticisms. The annual fee is now $795 and Chase has gone much further in the direction of lifestyle credits than the original Sapphire Reserve ever did. You still get the excellent $300 travel credit, which I think remains one of the easiest premium travel credits to use. But now there's also up to $500 per year for stays with the Edit by Chase Travel, split into $250 credits. There's up to $300 in dining credits at restaurants participating in Sapphire exclusive tables. There's up to $300 annually at StubHub and Viagogo. There are lift benefits, DoorDash benefits, and other credits layered on top. And again, on paper, that's a huge amount of value. Chase itself advertises more than $3,000 in annual travel and lifestyle value, but the criticism is that some of these benefits aren't nearly as simple as the old $300 travel credit. Take the $300 dining credit. You can't just go to any restaurant and get $300 back. The purchases have to be made at participating restaurants in Sapphire exclusive tables, and Chase's own terms say the participating restaurant list is subject to change. Then there's DoorDash. The Wall Street Journal points out that some Sapphire Reserve DoorDash credits now come with minimum purchase restrictions, making it harder to simply use the $10 credit to get $10 worth of stuff. Actually, the $10 credit is also limited to groceries with DoorDash and only $5 out of the $25 you get each month is for restaurants as well. So it's like two different things that you have to think about with DoorDash. You can't just use it on anything through DoorDash. And we've actually seen how sensitive people have become to any potential tightening of benefits. Earlier this month, Chase's website briefly showed language suggesting that you couldn't use both of the Sapphire Reserve $250 edit hotel credits on back-to-back stays at the same property. People immediately noticed. People immediately complained. I also made a video on that. And Chase then clarified that the language was an error and that cardholders can still use the credits on back-to-back qualifying stays, which is good. But the whole episode illustrates the problem. When a card costs $795 a year and the justification for that fee is spread across 10 or 15 different credits, people become hyper aware of every single change in the terms. Because losing one $100 benefit here and one $200 work around there can suddenly change your calculation of whether a card is worth keeping. So I think the Wall Street Journal is right about something very important. The premium credit card game requires more work than it used to. You have to know when the credits reset. You have to know which merchants qualify. You have to enroll in certain benefits. You have to remember to actually use them. You have to keep track of changes in the terms. And you have to avoid falling into the trap of spending money simply because a credit is available. But here's where I think the conversation can become a little too negative, because harder to maximize doesn't automatically mean bad value. Let's take the platinum. Yes, it costs $895. But if you are somebody who actually uses the benefits organically, the math can still be extremely good. Suppose you naturally use the $200 worth of Uber cash. You subscribe to eligible streaming services anyway. You use most or all of the $300 entertainment credit. You eat at resi restaurants and use the $400 resi credit. You book a qualifying fine hotels and resorts collection stay and use the hotel credit. Suddenly, before we've even valued the airport lounge access, hotel elite status, airline credit, clear plus, travel protections or membership awards points, you can already be well beyond the annual fee. And then there is lounge access. Amex says the platinum provides access to more than 1,550 airport lounges worldwide, including Centurion lounges, Priority Pass lounges and a limited number of annual Delta Sky Club visits when flying eligible Delta flights. If you're traveling 20 or 30 times a year, that isn't some imaginary coupon book benefit that can genuinely transform your airport experience. The same thing applies to Chase. The Sapphire Reserve costs $795, but the $300 travel credit is incredibly broad and easy to use. So for many frequent travelers, I would immediately reduce that cost to $495. Then if you naturally use even one $250 edit credit, you're effectively down to $245. Use some of the dining or StubHub credits and suddenly the annual fee can already be covered. And that's before you're putting any value whatsoever on Chase Sapphire lounge access Priority Pass travel insurance, 4x on flights and hotels booked directly, 3x on dining or the ability to transfer ultimate rewards to airline and hotel partners. And this is why I think the correct conclusion is not premium credit cards aren't worth it anymore. The correct conclusion is premium credit cards are becoming more lifestyle specific. 10 years ago, it was easier to say you travel a lot, get this card. Now the question is, do you travel? Which airlines do you fly? Which airports do you use? Do you stay at luxury hotels? Do you use Uber? Do you go to Resi restaurants? Do you buy concert tickets on StubHub? Do you use DoorDash? Do you already subscribe to these covered screaming services? Screaming services? Streaming services? Because if the answer to a lot of these questions is yes, then these cards can still be absolute monsters in terms of value. And interestingly, even one of the rewards experts quoted by the Wall Street Journal ultimately admits that there's still value to be had. I think that's the key takeaway. All right, guys, that is the video for today. I hope you liked it. Leave your comments below. We'll see you next time. Bye-bye.