Why Wealthy Americans Love AmEx: Amex Platinum, Amex Centurion Card | CNBC Reaction

you could probably have 30 or 40 cards and still get a proof for American Express if you look like a big spender before adding any credit cards one of the most important things to do is to understand what the bank is looking for in a customer specific to American Express I've seen way too many people get grade listed and end up in pop-up jail because they look non-profitable today we're going to react to a CNBC video on why wealthy Americans love American Express I'll pause throughout it to add some color and hopefully give some insights on how to save some money big favor before we dive into everything is to give this a thumbs up to help out the algorithm that way other people can see this probably the people who need to that way they don't get screwed also if you are new consider subscribing super quick but I might flip the video if it gets flagged by the copyright system even though it's technically fair use American Express began as a freight forwarding company in 1850. I actually kind of did not know that that's kind of crazy I knew about the check system and the charge cards but I didn't know they do freight stuff as well wasn't until the late 19th century that it began its transformation into a payments company then in the 9 1950s following its high success from traveler checks it introduced its first charge card to offer customers a more convenient way to pay it's kind of crazy to think how much they've innovated in that time I know right now we think of innovation as like Ai and like Robotics and stuff but this is still pretty crazy this is 1959. the fact that they're still relevant and they're not just surviving they're thriving where the brand truly begins as we know it today in my opinion the gold card the Platinum Card the corporate card business what sets Amex apart from the rest of the industry the way in which their Network operates I'm probably interrupting but yeah they run the whole process meaning that they don't really have to share the profits which is pretty cool credit cards from companies like visa and MasterCard function in what's called an open loop system when a card holder uses the card in their Network to make a purchase from a merchant they generate Revenue by relaying that information from the issuers to the acquirers so everyone in that process has their hand in the process so every everyone kind of gets a little bit but American Express gets everything visa and MasterCard are merely card networks so they process transactions but they're not actually issuing credit so you kind of think of visa and MasterCard like tech companies where they're like stripe they kind of get part of that transaction American Express is taking on a lot more risk but they also get higher upside American Express is both they are A lender of credit and also a card Network that really enables them to see exactly what their customers are spending down to the item that's also why American Express tends to be pretty good about catching certain behavior that they don't want because they can have level three data so they can kind of see exactly what you're buying if you're buying gift cards that's pretty obvious I'll probably add to this in a future video as well but for cards like the Centurion card they can actually look at the transactions that you have to see who they should approve or guess who they should invite so they want people who are spending money at luxury stores and it's going to Michelin star restaurants and buying premium Fair ticket closed loop system also allows Amex to earn money from interest unlike visa and MasterCard The company generated about 9.9 billion dollars in net interest income in 2022 but interest income is just the tip of the iceberg when it comes to amex's total revenue discount revenues or fees charged to Merchants that accept its cards so discount revenue is pretty much the swipe fees that they charged Merchants another really cool and interesting part is that American Express doesn't really make as much money from interest so there's a giant cohort of people that believe that credit cards are evil that they're pretty much making you a debt slave to the system and I kind of get why that might be true especially for more subprime cards for the prime and super Prime cards like Chase and American Express that doesn't tend to be the case if anything Chase loses money from their credit cards they're trying to kind of cross-sell you other products like mortgages investment accounts and other services American Express is focusing on discount Revenue hence why they want people who spend a ton of money brought in more than 30 billion dollars in 2022 contributing to more than 58 of amex's total revenue net of interest expense for that year they charge a premium to their Merchants to take their car s the merchants are willing to pay that premium because American Express is bringing them the most affluent biggest dispensers it's kind of like this chicken egg thing too where by having this whole clout aspect to it they've built this whole Rapport and it works for the vendors which means it brings in more customers and more experiences and stuff and it's just this virtuous loop on that note if you suddenly have an urge to learn more about American Express cards and you want to support the channel we do have links on the website asksabi.com and down below in the description box make sure that the links are competitive otherwise it is a huge way to support the channel so thank you guys in advance also if you are going for the platinum card I'd recommend checking card match that'll link down below to see if you have the 150k targeted offer generally speaking the Platinum 150k is the best starting point with American Express if you're not sure if the Platinum Card makes sense we also have a calculator on askthebby.com so Google ask sebby platinum worth it and it should pop up they charge the merchants two and a half or so it depends a lot of their revenue unlike their competitors is coming from this swipe because of its Reliance on discount fees Big Spenders are amex's most important asset ports claim that AMEX card members spend on average three times as much annually as those who aren't members I wouldn't be surprised by that but also I feel like that might be not the fairest number because you're looking at all Visa card holders all MasterCard holders compared to American Express when you look at it from let's say only Chase Sapphire Reserve numbers those look a lot better and closer and for example Chase Sapphire Reserve people spent thirty nine thousand dollars on the card maybe not as much as the Platinum people but still pretty decent Amex targets these affluent card holders through a spend Centric model that focuses on generating revenues primarily by driving spending on its cards so this is also why a lot of people get screwed because they think that they need to get an American Express card early on in order to get the fund the door to build history with American Express and ironically that's not the case so I like the blue cash every day I like the blue cash preferred and those cards but if you're someone that actually wants to get approved for those later cards later on it kind of screws you over what you're pretty much doing is telling American Express that you're not a profitable customer that you're not spending that much money the crappy part about this too is that it tends to scroll over people who would benefit the most from these bonuses that's generally why I tell people to avoid American Express until the end game until they actually are kind of later on in the career and have decent amounts of spend or maybe you're early in your career but you have a pretty high income earning job and your spent is going to be pretty decent for example if you're a software engineer or you're a consultant then you're going to have a decent amount of spend on that card anyways on the flip side if you are someone staying in school for a lot longer let's say you're going through medical school and you're not going to be spending that much then you're going to just look very not profitable which is not ideal because then you're not going to be eligible for these future bonuses when they talk about a spend Centric model they're really talking about being your go-to card and I think really good example of this is the AmEx platinum card on the face of it this is a travel card but you can also get a free Walmart Plus Membership I feel like Walmart paid American Express to add this as a benefit call me crazy or there were enough people who were not happy with the metrofocus perks of the Platinum that they thought this was a good idea but yeah I feel like Walmart paid for this it just feels so weird relative to the other perks on that card like uber Equinox everything else makes sense and fits into this whole like New York City Vibe but Walmart plus doesn't to me they're trying to make this a go-to every day not just something that you pull out a few times a year when you're traveling that's actually why a lot of the credits tend to be a bit more annoying and I wouldn't be surprised if we move more towards almost monthly only credits that way it stays top of mind it also ends up taking up real estate in your either physical wallet or your digital one so the more you see the brands the more often I guess you associate with it I feel like there has to be some Weird Science there it was someone who's ever played 2K for basketball or Madden one thing you might notice is that they keep showing the 2K logo even though you bought the game and you're playing it they're like subliminally advertising 2K to you on 2K sports that high spin Centric model is the reason why they can provide such strong rewards and why the customers are willing to pay those higher annual fees because the people that are spending are actually making this up in their spend Behavior it's kind of funny that they use the Platinum for that because the Platinum is probably one of the worst earning cards and maybe it's because their target demo the people they really want don't actually care about multipliers I feel like for us though the better example might have been the gold card or maybe the business Platinum of the business side Amex also utilizes the immense information gathered through its closed-loop system to create offers that attract and retain customers super fast touching on this but I really like how American Express has pretty good AMX offers so if you think about it they have a splattering of deals more than 100 often times and they're pretty good ones they're big name brands everything might not be relevant but you might have one to ten percent of things that are compare this to Chase and they use a different back-end provider and there tends not to be that many offers plus they just don't seem that good because they know you and they know the merchant they can create rewards that feel to you as the consumer like this program was custom designed for me one of the weird kind of costs with that too is that if you think about the average let's say platinum card holder in the US it's probably someone in New York one thing I've noticed in San Francisco is that a lot of the benefits and perks feel very New York Centric sometimes maybe Miami and LA but San Francisco seems like an afterthought so it begs the question of how someone in Houston or let's say Atlanta might feel because it doesn't feel like the benefits are catered to you having an affluent customer base also gives the bonus advantage of decreased credit risk credit losses through the cycle will move really closely with unemployment as you would expect whereas an American Express could actually see a little bit less than that it is kind of interesting to see that even American Express tends to be a bit better of this type of stuff has a pretty large provision for losses if you've read recent news reports in recent years Amex has begun to diversify its customers further mainly Target targeting Millennials and underbanked Americans also a lot of gen Z gen Z Millennial growth within the Platinum Card cohort has probably been the biggest boom they've talked about how about 60 percent of their new card Acquisitions are gen Z and Millennials and I think they've done some creative things there with experiences whether it's travel or dining I know a lot of people who don't care about those type of things hate the fact that there's these events and all these other things but I think it is working really well and to be frank I'm not really going to these things as well because oftentimes they do still cost money and it's not in San Francisco but for the people they're after for the ones that are very spend Happy who make a lot of money who want to go out and stuff this is the jam and this works exclusive concerts like they did one with Jack Harlow and you know they're just trying to reach a younger audience that will be the leaders and heavy Spenders of tomorrow they were actually the first us-based credit card issuer to win approval in China I think China as a whole is a pretty tough Market given that they're very mobile mobile Centric for payments but I feel like if there was one issuer to go in and win it would be American Express the rationale that the top of the top probably wants to flex and the places they're shopping probably take American Express the biggest threat for AMEX is the competition within the credit card industry to me the biggest weakness or danger for American Express really is that Marketplace power of visa and MasterCard and what they may decide to do with it as their technology advances those open loop card programs can better replicate what American Express is able to do there are a lot of startups that are kind of trying to do the whole partner thing and making that process a bit better American Express has also been pretty good about Acquisitions so I think they will stay ahead of the curve for me at least when I think about finance and Tech Innovation which sometimes feel like very competing terms American Express and Visa are at the forefronts they're not by any means immune to a downturn but at the same time with that high spender affluent customer those credit losses are likely significantly lower than some of the peers that are more focused on average consumer even subprime borrowers I would not be surprised if the Apple card gets blown up if we do see like a full-blown recession given everything that we know Chase and American Express are probably better off and the subprime ones might be hit a bit harder Capital ones also in a pretty interesting spot I guess five key takeaways from this video number one is that they have a closed loop system meaning that they monetize and they make money through the whole process the big risk being that they take the credit risk so we do see a Great Recession style thing then they might get screwed number two they've pretty successfully used their branding on the cloud to bring in these high spending customers it also helps that their cards focus on that because they have pretty aggressive Annual fees and most normal people if you don't dive into the benefits and stuff you're probably going to get scared off number three they use the fact that they have these high spending customers to get higher rates with Merchants number four they're winning younger consumers who are likely to evolve into that high spending customer if not already by having more events and lifestyle things number five they are pretty protected if there is a procession normal one because of the clientele as long as the middle class and up doesn't really get that affected they should be fine again if you want to learn about cards we do have links on the website ask sebby.com and down below in the description box if you made it to this point of video then leave a credit card Emoji in the comments down below and I'll try to hard it and also respond my question for you is what are your thoughts on American Express and their strategy also if you are someone that's a card holder what's been your experience if you're not when are you going to get them let me know when everyone else know in the comments down below big favor give this a thumbs up consider subscribing but otherwise hope you guys liked it see you guys next time

Channel: AskSebby

Views: 99,504

Keywords: ask sebby, asksebby, american express, why wealthy americans love amex, amex, amex platinum, amex black card, amex centurion card, american express benefits, amex plat 150k offer, amex green card, amex business, metal credit card, luxury credit card, heavy credit card, travel credit card, exclusive credit card

Id: CspTLUj3Xuo

Length: 14min 14sec (854 seconds)

Published: Wed Feb 08 2023