American Express wants you to pay an annual fee. That's one of the takeaways from the credit card issuer's investor call on Wednesday.
And they may not be the only one.
Company Chairman and CEO Kenneth Chenault told analysts this week American Express is "driving card fee revenues." He noted that many of the issuer's charge cards and cobranded cards carried annual fees. But that wasn't the case for the company's more blue-collar credit cards, such as Blue, Blue Cash Everyday and Clear.
"But we're now ramping up this (annual fee) strategy with our proprietary lending products (industry lingo for run-of-the-mill credit cards)," he said.
Cue Blue Cash Preferred, a new premium credit card from American Express that came on the scene last year. The card also debuted with a $75 annual fee.
The renewed focus on regular credit cards makes business sense because it accounted for the biggest increase in new cards issued, said Stephen J. Squeri, group president of global corporate services at American Express.
"So strong rewards, targeted for people who want rational rewards, cash back, charge fees for a premium version of that, and it seems to be resonating in the market," Squeri concluded.
Squeri also noted American Express isn't getting into the balance transfer game, saying that activity doesn't attract the consumers it wants. Instead, "it attracted people who are looking to part balances, to take advantage of promotional rates. So we're not doing that."
This fee strategy is making its way through the industry. The average annual fee on bank-issued credit cards increased by more than 20 percent from $59 in 2010 to $73 in 2011, according to Roy Persson, director of competitive tracking services at Synovate.
"Given the pressure for credit cards to find new sources of revenue, we expect this trend to stay positive in 2012," says Persson.
Are you getting more offers for cards with annual fees? Are would you pay an annual fee?
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