American Express Adapts to Attract Younger Consumers

The New Face of American Express: Capturing the Hearts of Millennials and Gen Z

by Faruk Imamovic
American Express Adapts to Attract Younger Consumers
© Getty Images/Justin Sullivan

American Express, traditionally known as a status symbol for the affluent and older generations, is undergoing a transformation. Historically seen as a card for the wealthy, often synonymous with jet-setters and those with substantial financial means, American Express (Amex) is now making significant inroads with a younger demographic. The company has adeptly adjusted its strategy, focusing on millennials and Gen Z, who increasingly view Amex as their card of choice.

Amex has long been perceived as the fancy credit-card company, its offerings aimed at those already well-established in their careers and finances. Young people were expected to start with low-level Amex products and gradually move up to premium versions as they advanced in their professional lives. Compounding this was Amex's limited acceptance by merchants, due to higher swipe fees compared to competitors like Mastercard and Visa. This often led to the inconvenience of not being able to use the card at various locations.

However, this scenario is evolving. American Express has revamped its benefits to appeal more directly to younger generations. The company has successfully enticed millennials and Gen Z to sign up for premium cards earlier in their financial journeys, often before they achieve the traditionally expected wealth status. Acceptance rates for Amex cards in the US have also improved, making it easier for consumers to use their cards without constantly checking for acceptance stickers at store entrances. This shift has transformed Amex into a more accessible yet still prestigious option for young consumers.

Appealing to Younger Consumers

The effectiveness of Amex's new strategy is evident in the company's first-quarter earnings. Millennials and Gen Z now account for 33% of its billed business in the consumer division, closely trailing Gen X at 37% and outpacing baby boomers at 31%. Furthermore, these younger generations represent 60% of new customer acquisitions worldwide, and a staggering 75% of new platinum and gold accounts are opened by millennial and Gen Z members. These premium accounts come with enticing rewards, albeit with substantial annual fees: $250 for the gold card and $700 for the platinum card.

Innovative Perks and Exclusive Access

To achieve its youth revolution, Amex has tailored its rewards to align with the interests and lifestyles of younger consumers. While travel points for flights and hotels remain popular, Amex has expanded its rewards to include credits on Uber rides, Disney streaming services, and subscriptions to the New York Times and Wall Street Journal. Additional perks include funds for Saks shopping sprees and Walmart+ memberships. According to Michael Miller, an analyst at Morningstar Research, these benefits turn the card into a lifestyle accessory rather than just a travel card. "They essentially act as really high-end coupons," Miller said, explaining how Amex collaborates with retailers to split costs, maintaining the cards' luxury appeal without compromising their price.

Amex also grants exclusive access to various events, offering early ticket purchases and special passes to high-profile gatherings such as the US Open and Coachella. The company even provides reserved spaces within these events, enhancing its reputation for exclusivity. Daisy Hernandez, credit-cards editor at The Points Guy, highlighted Amex's strategy at events like Coachella. "If you have a platinum card, you can get into the Amex tent," she said, noting the appeal of amenities like free water fountains and air-conditioned seating. These premium access features make the card especially attractive to those seeking unique experiences.

Travel perks remain a significant draw for millennials and Gen Z. The platinum card offers credits for hotels and airline fees, covers the cost of Clear Plus membership for expedited airport security, and grants lounge access at multiple airports. Additionally, the card includes restaurant-reservation benefits through the Resy platform. "They haven't ditched the travel stuff at all," Miller noted. "It's really more of an addition."

American Express Adapts to Attract Younger Consumers
American Express Adapts to Attract Younger Consumers© Getty Images/Mario Tama

Laying the Groundwork for Future Generations

For many young consumers, an Amex rewards card is akin to a valuable subscription service that costs less than $60 a month. Amex claims the platinum card's credits are worth approximately $1,500 a year, far exceeding the annual fee. This makes the card a compelling option for those looking to maximize value from their financial products. American Express offers a variety of cards with different perks, allowing consumers to choose the one that best fits their needs.

This strategic focus on younger, high-income consumers who prefer to use cards for all transactions provides Amex with significant bargaining power with merchants. The company can leverage this power to ensure widespread acceptance of its cards, enhancing its appeal to consumers who expect to be able to use their cards everywhere. Additionally, attracting younger consumers means Amex can benefit from longer customer lifecycles, as these individuals will remain in the market for decades, unlike older consumers nearing retirement.