Higher annual fees on top-tier cards are reshaping the market, creating a new category aimed at consumers who want premium perks without paying the highest prices.
It used to be possible to get a premium credit card for around $500 a year. Now, that amount increasingly buys something one tier below the most exclusive cards.
The shift is being driven by a sharp increase in annual fees for top-end cards, prompting issuers to target consumers who want travel, dining and lifestyle benefits but are unwilling—or unable—to pay $800 or $900 a year.
American Express, for example, raised the annual fee on its Platinum card by $200 last year, while Chase increased the fee on its Sapphire Reserve from $550 to $795. The changes have created space for a growing category of “near-premium” cards positioned between mainstream rewards cards and the most expensive products.
Ted Rossman, principal consumer finance analyst at Money Management International, describes them as an “upper-middle-class option.”
Premium perks at a lower price
The appeal is partly financial and partly psychological. Consumers can gain access to airport lounges, travel rewards and restaurant credits while still feeling they have a more exclusive product than a standard credit card.
Skye Zhao, a 25-year-old doctoral student in New York, decided against paying $895 for an American Express Platinum card. Instead, she opted for the $325-a-year Gold card after calculating that its travel rewards and other benefits would justify the fee.
The appearance of the card also mattered. Zhao particularly likes its rose-gold metal design.
The strategy is especially resonating with younger consumers. American Express says the average age of its Gold cardholders is 29, compared with 33 for Platinum customers. The company has redesigned the Gold card in recent years to appeal more directly to younger consumers, including benefits linked to dining and takeout.
The card now offers credits at businesses such as Dunkin’ and Five Guys, reflecting the spending habits Amex says are particularly important to younger customers.
Christophe Le Caillec, American Express’s chief financial officer, recently described the Gold card as a favorite among Gen Z consumers. He also said younger customers, particularly urban professionals, have become an important source of revenue growth for the company.
Airlines join the race
Airlines are also moving into the space as they seek to deepen customer loyalty while generating additional revenue through partnerships with banks.
Alaska Airlines launched its $395-a-year Atmos Rewards Summit card last year following the combination of its rewards program with Hawaiian Airlines. The company considered charging more but ultimately settled below the $400 mark.
Brett Catlin, Alaska Airlines’ senior vice president for network, partnerships and loyalty, said consumers are unlikely to maintain several cards with annual fees of $800 or $900.
American Airlines and Citi have also introduced a $350-a-year card, while Southwest Airlines and Chase are preparing to launch a higher-end product next year.
The growing number of products in this middle ground reflects an increasingly fragmented credit-card market. Issuers are looking for consumers who want premium experiences but remain focused on whether the benefits justify the cost.
Capital One’s Venture X card, introduced in 2021, was designed around precisely that calculation. The company says it targets customers who want premium experiences while still placing a high value on the overall return from the card.
For some customers, airport lounges have become a major part of that calculation.
Katie Suiters, a 38-year-old media trainer from Virginia, upgraded to Venture X after noticing the growing number of Capital One lounges at airports. She said she visited the lounges at least 10 times over the summer and considers the $395 annual fee well worth the cost.
But the expansion of near-premium cards does not necessarily mean they offer better value. Rossman warns that some of the benefits may be difficult for cardholders to use fully and that cheaper or no-fee cards can sometimes provide better returns.
The result is a credit-card market increasingly divided into several layers: traditional low-fee rewards cards, a growing group of near-premium products and an increasingly expensive top tier aimed at consumers willing to pay hundreds of dollars more for additional privileges.
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