By Abby Schultz

Premium credit cards that offer access to airport lounges and generous rewards for travel are getting more expensive and more complicated. The question for consumers: Are they worth it?

Chase Sapphire Reserve -- one of the most popular -- announced on June 17 that it was hiking its annual fee 45% to $795, topping the already steep $695 annual fee for the American Express Platinum card. Sapphire Reserve was introduced in August 2016, with an annual fee of $450.

Though pricey, consumers flock to these cards for the slew of rewards that can easily dwarf the fee. Sapphire Reserve's new menu of travel, dining, and entertainment perks can add up to more than $2,700 in annual value, according to the Points Guy, a card-tracking website. By redesigning the card to tap into all of JPMorgan Chase's assets, the bank was "able to increase the fee by only a small fraction of the incremental rewards and benefits that customers will get," says Chris Reagan, Chase's president of branded cards.

Still, $795, plus $195 for each authorized user, is "serious money," says Clint Henderson, the Points Guy's managing editor. "I've always argued that most consumers can get more than the value from the annual fee on these high-end cards, but consumers will really need to become experts to make sure that remains the case going forward."

Credit-card fees are critical to issuers. From 2015 to 2022, fee volume more than doubled industrywide to $6.4 billion, according to a 2023 report by the Consumer Financial Protection Bureau.

There's a good chance American Express Platinum cardholders may also see their already sky-high annual fee escalate. Amex -- the elder statesman of the premium card market -- announced June 16 that "major updates" are in store later this year for both the Platinum and Platinum Business cards. Amex spokeswoman Elizabeth Crosta said the company had "no additional details to share," including whether fees would go up.

Henderson expects Amex will want to retain its exclusive position as the most expensive card on the market. "I think we'll see a $995 annual fee for the Platinum card," he says.

Amex really doesn't have to worry about its hold on exclusivity. The Amex Centurion, or "Black" card, an invitation-only charge card that the company doesn't publicize, requires an initiation fee of at least $10,000 and an annual fee of $5,000, according to several published reports. (Amex doesn't provide details.)

In return, holders are provided with elite status with certain airlines, hotel, and rental car companies, in addition to other entertainment benefits.

Both the Sapphire Reserve and Amex Platinum offer points on purchases that can be applied to flights and hotels, in addition to statement credits. These are credits made to a consumer's monthly statement for specific purchases, such as up to $300 spent annually at Equinox sports clubs in a calendar year -- a perk offered by Amex Platinum.

Chase is doubling down on statement credits with its Sapphire Reserve revamp. These include a new $300 dining credit; a $300 annual StubHub credit for tickets to concerts and events; and $300 annually in monthly DoorDash promos plus a DashPass membership worth $120 a year.

Statement credits can be pretty complex, however. Sometimes, the annual credit is split into monthly or biannual increments. That is the case for Sapphire Reserve's credits for Lyft ($10 a month) and StubHub ($150 biannually). A $500 credit to the Edit, a collection of Chase luxury hotels and resorts, is split into biannual credits of $250 -- an amount that won't go too far at these high-end hotels.

"Two-hundred-and-fifty dollars may not even get you one night," says Sara Rathner, a NerdWallet credit-card expert. "I always warn people that a discount is not a discount if you weren't going to buy the thing in the first place," she says.

The new Sapphire Reserve card will be available beginning June 23. Existing cardholders, and those who apply before June 23, will get access to the new benefits beginning Oct. 26; the annual fee will be adjusted upward on their next anniversary date.

The new benefits include previous perks, such as a $300 annual credit that is applied to any kind of travel-related expense throughout the year. "It is and was one of the best, most flexible travel credits on any card I've seen," Rathner says. But it also revises its point adjustments to provide more benefits in some cases and less in other. More perks kick in after cardholders spend $75,000 each year.

Henderson of Points Guy hopes that Amex will move away from the "hard-to-use" statement credits, "and make it a bit more intuitive and easy for consumers." But that may not happen, since the banks stand to make more money when consumers don't take advantage of all the perks. Consumers "forfeit hundreds of millions of dollars in rewards value each year," the CFPB said in its 2023 report.

In the premium credit-card category, there's a third contender: Capital One Venture X, which carries a $395 annual fee. The Venture X's main perk? Its relative simplicity, according to Rathner.

The card comes with plenty of benefits -- such as $300 in annual travel booked through the Capital One portal, and a 10,000 point anniversary bonus worth $100 -- but there are no statement credits to keep track of, she says.

Chase and Amex may be willing to charge sky-high fees during a time of economic uncertainty and geopolitical unrest simply to secure wealthy consumers. In the first quarter, bad-debt write-offs on credit cards reached 4.7% on an annualized basis, according to Tim Kolk, president of TRK Advisors, a firm that works with smaller credit-card issuers.

"That's higher than any full year since 2011, with the most escalation in the middle-market and below segments, Kolk says. "Growing the safest part of the business with very high transactional volumes tends to become a priority in such times."

In fact, history has shown that when issuers add benefits to their cards, customers become more engaged and willing to pay higher fees, says Cristopher Kennedy, an analyst at William Blair. That's borne out in data suggesting that fee-based cards and the affluent card industry grew at a 6% compound annual growth rate from 2018 to 2023, compared with about 3% for no-fee cards.

As Chase's Reagan says, "We know that customers who are deeply engaged in our products, particularly in our many product benefits, are more satisfied and stick with us."

There's always the risk that higher fees will scare off consumers, but card companies have found that at the high end, the fee hasn't been an impediment if they offer consumers more value, says Moshe Orenbuch, a TD Cowen analyst. Though some holders will give up their card, others will use it more than any other card in their wallet -- and the perks and prestige will attract new consumers.

"They are clearly betting the positives will outweigh the negatives," Orenbuch says.

Among potential negatives is increased competition among JPMorgan, Amex, and Capital One, which could result in "offering rewards and perks in the near term that may weigh on near-term earnings," says Suryansh Sharma, a senior equity analyst at Morningstar.

Shares of JPMorgan Chase and American Express show diverging paths so far this year. JPMorgan is up 14.29%, while Amex is down 0.12%. Capital One stock has climbed 10.6%.

But Sharma says JPMorgan's bottom line is more likely to benefit because of how it has structured the points rewards system to incentivize spending within Chase and to disincentivize spending elsewhere by reducing points, for example, on general travel, including vacation rentals and cruises.

Henderson of Points Guy also notes the "huge, huge investment" issuers are making to build and operate airport lounges for their cardholders.

"The credit-card companies wouldn't be spending the millions upon millions of dollars it costs to build and operate an airport lounge if it wasn't bringing in big profits," he says.

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Paul R. La Monica contributed to this article.

Write to Abby Schultz at abby.schultz@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 20, 2025 14:28 ET (18:28 GMT)

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