By Paul R. La Monica

Credit card issuers are trying to attract more higher-end customers with the promise of more rewards. But there's a catch: Annual fees are going way up, too.

That could be good news for investors in JPMorgan Chase and other credit card stocks -- as well as a top maker of metal cards -- even if it's not ideal for consumers.

Chase announced new perks for holders of its Sapphire Reserve credit cards on Tuesday, including a new points boost program, expanded access to airport lounges, and promotional spending credits with partners such as Apple, Lyft, DoorDash, StubHub, and Peloton.

The cost? $795 as an annual fee. That's up nearly 45% from the current fee of $550.

The question now, though, is how Chase competitors react to the news of the fee hike. American Express is also preparing what it calls "major updates" to its Platinum Cards, saying in a news release Monday that it will be "making its largest investment ever in a card refresh."

American Express's Platinum Cards have an annual fee of $695, and there has been market chatter that the company could potentially raise the feel to $1,000 a year.

A spokeswoman for Amex told Barron's that the company has "no additional details to share" about fees or new perks, but reiterated that the company is "always looking for ways to make Platinum Membership even better for our Card Members and plan to refresh the Consumer and Business Platinum Cards later this year."

It's also unclear how Barron's stock pick Capital One -- which recently completed its merger with Discover and offers consumers the lower-cost Venture X rewards card -- will react. The Venture X has an annual fee of $395. Capital One had no immediate comment.

What's this all mean for investors?

Shares of JPMorgan Chase fell slightly Tuesday. But the stock is up more than 12% this year. Big financials are rallying on hopes that consumers and businesses will continue to spend enough to stave off a recession. Fears about prohibitively high tariffs are fading, as negotiations between the U.S. and numerous trading partners continue. Capital One stock is up 10% as well this year, while Amex is flat.

Still, the possibility of higher annual fees from the big three high-end card issuers, coupled with the likelihood that customers will spend more to reap more premium card benefits, should be good for JPMorgan Chase, American Express, and Capital One -- with one caveat.

"We may see higher revenues such as card fees and spending volume growth as a result of these changes," said BTIG analyst Vincent Caintic in a report Wednesday. "We will also see higher expenses from increased cardmember engagement and rewards."

In other words, any boost to earnings from more spending could be offset by increased costs.

Still, the benefits of higher fee revenue could outweigh any uptick in expenses. The increased competition could benefit all the card companies, given that "it brings more attention to premium products," Moshe Orenbuch, an analyst with TD Cowen, noted in a report Wednesday.

He expects increased premium offerings from Capital One with its Venture X card as well, "particularly as it realizes benefits from owning the Discover network."

And, according to Orenbuch, no matter which company winds up gaining the most market share in the credit card business, one stock that isn't a financial company will benefit: CompoSecure, a manufacturer of metal cards.

CompoSecure is a "likely clear winner in this game of accelerating premium-ization" in the card business, Orenbuch said. He noted that Chase and Amex are its two biggest customers, and that Capital One is a customer as well.

"In the past, card refreshes generally do spur increased account acquisitions. The same goes for new card designs...as well as limited edition/color designs," Orenbuch noted. "This should help accelerate the card replacement cycle and add to [CompoSecure's] cards sold in the coming quarters.

So forget about paper or plastic. For investors looking to take advantage of changes in the high-end credit card industry, heavy metal may be the way to go.

Write to Paul R. La Monica at paul.lamonica@barrons.com

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June 18, 2025 12:44 ET (16:44 GMT)

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