Chase Sapphire Reserve

Marketing: Hey you, your travel credit card annual fee is worth it because of travel perks.

You: But I can’t travel, so what am I supposed to do then?

Last week, Chase became the first premium travel credit card issuer to proactively offer relief on annual fees, with a $100 credit on Sapphire Reserve Credit Card annual fees. People aren’t traveling, so why should they pay for travel rewards they can’t use?

American Express, Goldman Sachs and Capital One announced flexibility on payments and other card features, but no other has of yet plunged into proactive reductions on annual fees. The most primed candidates for such reductions would be annual fees over $100 which are justified by very travel-centric benefits.

American Express also extended the spending period for unlocking welcome bonuses by an additional three months, to help customers achieve their rewards.

a sign with flags on itWhenever uncertainty looms, a ‘watch and learn’ approach is fair, at least at first. Knee jerk reactions rarely yield the best results, and if you don’t fully know the extent of what you’re dealing with, great mismanagement or underestimation can only exacerbate an issue.

Basically, premium travel cards could look insulting if an offer is too weak, by failing to understand the severity or longevity of customer concerns.

It’s absolutely fair for credit card issuers not to have yet acted in any broad scale on annual fees, but after Chase made the first move, the clock is ticking. Disproportionate gesture can leave cardholders underwhelmed, but inaction is equally dangerous. It’s better to do ‘something’ and re-up, than to have people eyeing up which cards to slash, based on their steep fees.

When you can’t use perks, it’s very, very easy to start slashing.

contactless credit cardPeople who hold premium credit cards are typically those most willing and able to bring on a recovery, when travel is safely advisable again. They’re also typically a travel brands best customer, because their card membership is only justified by travel.

Someone holding a premium airline or hotel credit card with key perks tied to elite status, or travel perks like lounge access are brand enthusiasts. They go out of their way to stay loyal, and their credit card is proof of their relationship both emotional and physical with that airline, credit card company or hotel.

Short-term pain for credit card companies, like annual fee relief now, will mean loyal customers at the ready when the restart button is engaged. Anything less could mean cardholders downgrading to lower annual fee cards anyway, sometimes meaning an entire loss of any annual fee collection, or worse, the customer jumping into a new relationship with a credit card, airline or hotel competitor.

Extending benefit validity simply isn’t good enough.

There’s just not enough emotional connection or gesture to being able to use something later, maybe. These are people who gain value from actually using their benefits, and for the most part only justify their cards by doing so frequently. Until there’s an opportunity for them to tangibly do so, only cash in hand, or cash returned moves the needle.

Paying With Credit Card On LaptopYou don’t want to give any loyalist a reason to leave right now.

When a bank says “we’ve put money back onto your account with a fee credit”, it’s inherently exciting, because there’s a lower balance when you log-on than you expected to see. That’s more visual and tangible than “you can use this thing later than expected”. Regardless how large or small the gesture, it feels like a two way street, not just money going out.

If a $550 a year premium travel card is 50% justified by lounge access, that’s a good indicator of just how deep a cut should be, though we may not see that level any time soon. Either way, it’s time for a new type of introductory offer from credit card companies, and that’s all about what they’re willing to do to keep you around…

Gilbert Ott

Gilbert Ott is an ever curious traveler and one of the world's leading travel experts. His adventures take him all over the globe, often spanning over 200,000 miles a year and his travel exploits are regularly...

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  1. Our household pays $2000+ in travel credit card premiums, so it was more than time to review the value proposition of each card. Since we are not using the cards for their primary purpose and with thoughts that the fees were already unjustified, we will be culling the collection.

    The travel cards reflect a general investment in travel and credit card companies should recognize the diminished value of these cards during the crisis and respond with lower fees and enhanced earning structures.

    Credit card are among the many relationships that will be evaluated during this time and companies will be remembered for how well the met the needs of their customers.

  2. Just as the Covid shutdown started hitting me, I have an Amex Delta card, I got hit with their annual fee, I protested and talked to a rep by chat, and the supervisor said it was just natural, annual and I just had to shut up and suck it up. I AM SERIOUSLY RECONSIDERING DELTA AND AMEX BECAUSE OF THE ATTITUDE ESPOUSED BY THAT SUPERVISOR. FUCK YOU AMEX FOR PROFITING OFF ME AT THIS TIME!!!. BTW, I have only been a “loyal” Amex customer since 1986….
    Winston Hines

  3. Maybe it is just me but I don’t see the need to cut back when benefits are good for a year. I’ll get the $300 travel value for my CSR and wouldn’t think of dropping the Amex Platinum card I’ve had for many years. Other cards all have free nights, companion tickets, etc that cover their fee.

    People you will travel again and most of the benefits are good for an extended period of time. I probably pay $1750-$2000 a year in fees and have no intention of changing anything (May add a couple more to ensure points I’ve earned don’t expire). Also maybe I’m just an out of touch 1 percenter but the fees I pay are trivial compared to my stock portfolio and a very small rounding error on my overall spending.

  4. American Express gave me a $500 credit because of the crisis. I explained that all of the premium benefits of the Platinum Card are travel related and since we can not travel for possible another couple of months, the Platinum Card was of no more value to me than the Amex Green Card. It helped that I have been an Amex customer for over 40 years. I also had the choice of 50,000 MR points. They did not give me a hard time, in fact they presented these options to me. So my Platinum Card fee for 2020 is a mere $50. They were understanding and pleasant about the whole thing.

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