American Express leads premium credit card market but rivals gaining ground

In the United States, the premium credit card market has been observed to be fiercely competitive, with American Express, Chase, and Capital One vying for top positions. A recent study conducted by BofA Securities analyst Mihir Bhatia involved surveying 2,555 individuals to assess their views on various premium credit card brands, focusing on perceived value and reward preferences. The survey's findings revealed that approximately 50% of the respondents held a credit card with an annual fee, and 13% owned cards with annual fees exceeding $250, classified as premium credit cards. American Express remained dominant, with 62% of respondents associating it with premium branding, although there was notable improvement in brand perception for Chase and Capital One. Respondents selected Chase and Capital One 50% and 43% of the time, respectively, indicating a growing recognition for these brands since the last survey in fiscal 2023, where they had lower association rates. This change demonstrates that while American Express continues to be an aspirational choice, competitors are effectively narrowing the perception gap. The reasons cited by consumers for applying for premium credit cards primarily centered around upgrading rewards systems; 55% of those surveyed indicated this as their main motivator, followed by preferences for different types of rewards and brand trust (both at 44%). Card points emerged as the significantly favored category of rewards among premium cardholders. However, across the entirety of the survey participants, cash back ranked as the most valuable reward, noted by 70% of respondents, with card points trailing behind at 37%. These findings emphasize the importance of flexibility and diverse reward offerings in retaining customer interest. Additionally, the study included insights about consumer attitudes toward Discover cards. A striking 65% of all survey respondents, and 79% of premium cardholders, expressed openness to acquiring a Discover card. Still, concerns regarding Discover's acceptance (notably 44% among all respondents and rising to 73% for existing premium cardholders) present a significant challenge. Consequently, Capital One might need to implement substantial strategies and investments to enhance its brand perception and compete more effectively within the premium segment, particularly as consumers weigh benefits against acceptance constraints.