Benefits for the Bourgeoisie
Why your Sapphire and Platinum will only get worse
Super worthless post on something that’s been bothering me: attitudes surrounding high end credit cards. That is, the Chase Sapphire Reserve ($795/year) or American Express Platinum ($695/year). People (see below) are simple obsessed with them.
There are only two reasons you should ever have these cards:
You travel a lot
You own a high volume low margin business
These people know who they are, so it’s not worth discussing why it makes sense for them. If you work a typical job, you do not check either of these boxes.1 Yet millennials and Gen-Z with low six figure jobs cosplaying as the coastal elite (“People”) sign up for these cards en masse. They do so for three reasons:
One, they want to feel prestigious. This is the probably the most detestable reason. Besides being indicative of the worst kind of people, the bonus points benefits (5x on flights & hotels) are exactly the kind of discrete purchases that you do not need to flash a card for. When someone puts a Platinum Amex down to pay for dinner, it not only conveys their superfluousness and superficiality, but it also screams “I’m financially stupid.”
Two, they want the airline benefits. These are considerable. Yet with four weeks of vacation a year, that will never be taken advantage of. The lounges suck. The food is bad and the lines are long. CLEAR is crowded There’s a reason no one worth their salt is in these lounges: they’re flying out of Teterboro, they’re in the business class lounge, or they’re young and smart, so they go straight to the gate and read a good book.
Three, they think the aggregate benefits are worth it. This is the pitiful trap at the top of Dunning-Kruger’s “Mount Stupid" where smart, budget conscious young folks often find themselves. Sure, with the airline fee credit, hotel credit, Uber credit, digital entertainment credit, a points vacation every two years, and a once-a-year fee-waived foot massage from a yak in Tibet (if you book through their app and remember to pet) you can make up for it. Spend that time doing something else. There are far more interesting ways to waste the precious hours in the day, and much better ways to save money.
The problem with luxury goods is that their value is inversely correlated with their TAM. In other words, the larger the market for a given product, the less prestigious that product is. Arnault and Pinault know this well, and take great steps to prevent prestige dilution. Acquisitions provide an auxiliary lever through which to defend against this dynamic and maintain their products as Veblen goods.
JPMC and AMEX lack such tact and position. They also suffer from the tragedy of the prestige commons; while unit economics improve with volume, brand equity and the very (service based) businesses they’re running—lounges, upgrades, etc.—diminish in quality. As such, the increasing popularity of these cards all but assures they’ll only get worse.
Opt for cash, debit, and if you insist on a credit card, find a simple and cheap one on NerdWallet.2 But most of all, worry about something else.
Unless you are a management consultant, in which case, I’m sorry.
We often suffer from denial and belief perseverance under consumerism. NerdWallet suggests bunch of cards you’ve never heard of with great and reasonable benefits that are somehow are nonetheless unattractive.
My contrarian advice if you feel this way (especially given everything herein): get the Amex Green Card. It checks all of the boxes above: prestigious with a few decent benefits, including the rental car insurance and purchase protection that represents the true value of a credit card. The annual fee is much lower ($150). You can play the points game and don’t have to feel like an idiot using it to pay for dinner or air travel (3x on dining and flights). You’ll still lose money and a bit of time of course, but far less than you would otherwise buying into these schemes.