Credit card companies have historically made the bulk of their profits from interest paid by cardholders, and now they’re tapping into exclusive experiences to drive up annual fees.
Driving the news: Last week, American Express bought Tock, a reservation platform with around 7,000 restaurants, bars, and other venues, for $550 million. The company already owns rival platform Resy, giving cardholders special access to tough-to-get tables.
- Consumers, especially in Canada, are generally pulling back on dining out, but Amex cardholders seem to be the exception: spending $137 billion on restaurants last year.
Why it matters: Amex executives are betting that perks like pre-sale concert tickets, access to airport lounges (provided you can actually get in), and bookings at top restaurants will lure you into shelling out $799 a year in fees on the company’s shiny, silver Platinum card.
- A customer that pays their balance on time (avoiding interest) is less valuable for Amex, making high annual fees, especially for cards that promote spending, a win.
By the numbers: Last quarter, Amex saw a 35% jump in profits compared to the year before, as customers signed up for new cards and growing balances collected interest. Customers also spent $419.2 billion on their cards, up 5% from a year earlier.—SB