After rumors have been swirling for weeks, it’s just been announced in an official Amex press release that starting October 6, 2016, the Amex Platinum is offering 5X on airfare when purchased directly from airlines and 1.5X on purchases of $5,000 or more. While Amex has denied this was a response to Chase Sapphire Reserve card, it’s hard to take that seriously considering all of the positive press and buzz the Sapphire Reserve card received recently.
So what does this mean?
First, I think these additional perks further reveal who the true target market is for the Platinum Card from American Express. It’s been reported that the average household income for Platinum and Centurion cardholders is over $700K. Obviously that figure is skewed by those in the top 1% and because Centurion cardholders are in the mix, it’s not a super accurate figure of the average Platinum cardholder’s income, but it’s still pretty telling.
I think most agree that the the target market for the Platinum Card are high spenders with high to very high incomes compared to the average household, many of which also value the “prestige” of the Amex brand. These are the type of people who tend to pay for travel and occasionally make large purchases that would meet the $5,000 threshold to earn 1.5X. So Amex appears to be further catering to this affluent market… and not to the credit card “enthusiasts.”
That’s why a lot of people (including myself) don’t see this as a significant boost in the value of the Platinum Card. But that doesn’t mean that it doesn’t make the Platinum a more attractive credit card. After the drop of the Citi Prestige benefits, the Platinum Card became an even better competitor and with these added benefits, the Platinum Card is a bit more attractive, although not to everyone.
I’ll use the hypothetical question of whether or not you should hold on to the Platinum Card when you have a Sapphire Reserve card to shed some insight on when it might be worth it to keep the Platinum Card in light of the new benefits offered.
Should you combine the Platinum with the Sapphire Reserve?
One question that a lot of people will invariably ask is if it would be worth it to hang on to the Platinum Card from American Express if they already have the Chase Sapphire Reserve. The thinking is that the 5X on airfare will out earn the 3X that the Sapphire Reserve will earn on those same purchases and so it might be worth it to keep both cards and accumulate points in separate reward programs.
Let’s see how the math plays out….
Assume a value of 1.8 cents per point for Membership Rewards.
Now consider that with the $200 airline credit, the cost of the Platinum Card is essentially $250 per year.
Here’s where it gets a little complicated. While both cards offer Priority Pass, the Platinum Card also offers several additional benefits including Centurion Lounge and Delta SkyClub access (when you fly with them) along with automatic Gold Status with SPG (and therefore Marriott) and Hilton. These benefits can be pretty valuable depending on your personal travel habits. Therefore, their value should be factored in when deciding on keeping the Platinum. For simplicity’s sake, I’m not going to factor them into my initial calculation, but just remember to keep their value in the back of your mind.
The break-even point
So in order to break even with the Platinum card you’ll need to earn 13,888 Membership Rewards since that equates to $250 of value. With 5X on the spending that means spending $2,777.60 on airfare on your Platinum Card in a year to break even. This means your net gain when adding the Platinum Card to your wallet would be zero.
However, if you never bothered with getting the Platinum Card that $2,777.60 on the Sapphire Reserve would net you 8,332 Ultimate Rewards, which at 2 cents per point would come out to $166.6. This means that your net gain would be $166.
Netting $166 is obviously better than netting $0.
The point of adding the Platinum into the mix is to earn more overall value so that means you’ll need to find the spending threshold where the value earned from the Platinum will be more than the value earned from the Reserve, after factoring the additional $250 you’ll be paying for this additional earning potential.
I’m not a mathematician so feel free to check my math here but I believe that spending point is at about $8,500.
Spending $8,500 will net you the following:
- Platinum Card at 5X = 42,500 Membership Rewards = At 1.8 cents per point that’s $765 in value.
- Chase Sapphire Reserve at 3X = 25,500 Ultimate Rewards =At 2 cents per point that’s $510 in value.
Once you factor in the annual fee ($250), that Platinum Card helped you earn $5 more in value after spending $8,500 on airfare.
Now, again, this raw math does not factor in the benefits of the Platinum Card like Centurion/Delta Lounge access and hotel elite statuses. Those benefits can be very valuable to a lot of travelers and if you put a lot of value in those benefits, then the needed spend for making it worth it to hold on to the Platinum Card will be much lower, probably at just 3 to 4 thousand bucks.
So the finding here is that the Platinum Card’s new benefits can add value to your earnings but you’ll probably need to spend a few thousands bucks on airfare to reap enough additional value to make it worth it. However, if you really value perks like Centurion Lounge/Delta SkyClub access and hotel status then there’s less of a need to spend a lot and you can more easily rack up value with the new 5X spending.
One thing to not forget is that the Platinum does not have built-in protections for things like trip delay and interruptions but other cards do. For example, the Citi Prestige offers the best trip interruption/delay protections as it only requires you to wait 3 hours before coverage comes into effect and the Chase Sapphire Reserve requires you to wait 6 hours. Unfortunately, these protections are not built-in to the Platinum Card and you’ll have to pay extra for this kind of coverage to apply.
So while you might be earning more points on your flights, you’ll have to pay to receive some protections that would come with other cards.
Finally, always remember that targeting earnings for different reward programs is not always ideal unless you have a plan (even a tentative plan) to keep your point earnings from getting stranded. While the 5X could net you a little bit more value in some instances, it won’t do you any good if you don’t have enough Membership Rewards to redeem for trips and you’ve reduced your Ultimate Rewards earnings that you would have put to use. It’s common sense but some people get so caught up in maximizing points they lose focus on the big picture.
I think there are four final words here:
- If you spend over $8,500 on airfare in a year then the new Platinum Card 5X on airfare perk benefits will likely net you enough value to make it worth holding on to, while also keeping the Sapphire Reserve.
- If you value Centurion Lounge and Delta SkyClub access along with hotel status and spend a few thousand dollars a year on airfare, it could very well be worth hanging on to the Platinum Card.
- If you value Centurion Lounge and Delta SkyClub access along with hotel status but don’t ever spend money on airfare, it’s a tough call on keeping the Platinum and only you will be able to gauge how much you value the benefits offered by the Platinum Card.
- If you don’t ever spend money on airfare and don’t care too much for Centurion Lounge and Delta SkyClub access along with hotel status, then your decision is easy: you should ditch the Platinum.
Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.