NEW YORK—New evidence that the credit card rewards battle won’t slow down anytime soon–American Express’ latest quarterly report reveals that increasing its rewards offerings has helped it to offset the loss of its Costco business.
The largest U.S. credit card issuer by purchases reported strong first-quarter revenue, and AmEx shares rose 2.9%. Excluding Costco Wholesale Corp.'s contribution to year-earlier results, revenue rose 6.2%—an acceleration from the fourth-quarter's 5% growth rate, Bloomberg reported.
More than a year ago Amex lost its longstanding contract with Costco.
“Chief Executive Officer Ken Chenault stepped up spending on marketing last year and has sweetened rewards to keep customers after JPMorgan Chase introduced its Sapphire Reserve card in August, causing a temporary increase in attrition at AmEx. Those efforts, as well as a broader restructuring, seek to reinvigorate AmEx after its decision to part ways with Costco sparked the lender's worst stock slump since the financial crisis,” noted Bloomberg.
As CUToday.info has extensively reported, a rewards battle is underway in the credit card space, with major card issuers investing big dollars to beef up their offerings.