American express plans to focus more on the cards that carry annual fees

Sunday, February 19th, 2012

American Express now plans to increase its focus on cards that carry annual fees. The announcement was made in an investor webcast, according to reports from the Wall Street Journal MarketWatch. The company is planning to introduce new fees in order to bring in more revenue.

Most conventional AmEx charge cards usually do charge an annual fee. However, as the company has moved into new markets, a few premium revolving credit cards are likely to charge a fee. For instance, the Blue Cash Preferred Card now carries an annual fee of $75 after it was re-launched. It is the same with Blue Sky Preferred card as. Some of the other cards such as Blue Sky, Blue, Blue Cash Everyday, don’t carry annual fees at the moment.

Following the settlement the company had with MasterCard and Visa, it is facing a shortage in revenue because the payments from these two major credit card issuers, is going to come to an end. During the fourth quarter of last year, the expenses tied to the credit card rewards programs had seen a 10% increase. This was part of the new customer marketing strategy. This resulted in increased expenses as well as loss of revenue for the company. Hence, the company made an announcement that it would be cutting down on the operational expenses during this year. This would include benefits, salaries, equipment, as well as occupancy.

AmEx is one of the major card issuing companies based on spending. The company is well-known as the card issuer for the affluent section. They have always had a loyal customer base and this section does not carry forward balances each month. AmEx on the other hand offers customers value added services. Despite the fact that American Express has positioned and marketed itself as the card for the affluent section, the company is at present trying to reach a wider range of customers. They are also looking at customers whose applications for a card may have been rejected in the past due to some reason. As per the available reports, around 20% of the prepaid credit cardholders are the ones who were previously been turned down by the company’s conventional charge cards. It has also been noticed that the new customers are much younger and are under 35 years of age. At present around 50% of these prepaid card holders are all in the younger age group according to reports.

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