American Express Sees Surge in Popularity Among Gen Z and Millennials

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The American Express card has long been a symbol of elite status, often associated with hefty annual fees and exclusive travel perks. Traditionally, this image resonated with baby boomers and older generations. However, a new trend is emerging as Gen Z and millennials flock to obtain the prestigious card. In 2023, these younger generations accounted for 75% of new consumer platinum and gold accounts, according to Howard Grosfield, president of U.S. consumer services at American Express.

Elon Musk in a post on X said that his $56 billion incentive pay package and a move to relocate its legal headquarters to Texas are currently being approved by Tesla’s shareholders. The results of the meeting will be announced today.

Tesla shareholders are voting on a proposal to ratify its CEO’s 2018 incentive package, valued at up to $56 billion at the time. An official familiar with the preliminary numbers confirmed that the billionaire was correct on both counts.

In addition to Musk’s pay package, shareholders are also considering other proposals, including the relocation of the company’s legal headquarters from Delaware to Texas and the re-election of two board members: Musk’s brother Kimbal Musk and James Murdoch.

Tesla’s board recently stated that Musk deserves the pay package as he has met all the targets related to market value, revenue, and profitability. Several executives have also praised Musk’s contributions to Tesla’s success, with some even offering personal tours of Tesla’s Texas factory to shareholders who cast votes.

Despite the support, some major stakeholders, including Norway’s sovereign wealth fund and California’s two largest pension funds, have voiced their opposition to the pay package, labeling it as excessive.

The pay package has previously been rejected by a Delaware judge who deemed it an “unfathomable sum” approved by a conflicted board with close ties to Musk.

American Express is witnessing a significant shift in its customer base. Once primarily a symbol of stability for older, affluent customers, the card is now highly sought after by younger generations. Grosfield explains that Amex’s premium products and membership model appeal to high-credit quality, high-spending younger customers, ensuring a longer relationship and growth into their peak spending years.

It might seem surprising that younger generations, dealing with high inflation, student loans, and high housing costs, would opt for a card with a steep annual fee (a platinum Amex card has a $695 fee). However, millennials and Gen Zers are willing to pay for lifestyle perks that go beyond travel points. The platinum card offers entertainment credits for platforms like Hulu and The New York Times, Uber cash, airport lounge access, and even credit to shop at Saks. According to Amex, the card provides $1,500 in value per year relative to its annual fee.

“Until about 10 to 15 years ago, we thought that no-fee cards were the entry point for younger customers,” Grosfield says. “We’ve learned that millennials and Gen Zs prefer brand affiliation, travel, dining out, and the special experiences our premium cards offer.”

Amex’s reputation as a card not accepted everywhere is also changing. Since 2017, the number of locations globally that accept American Express cards has more than tripled. “Nearly 18 million stores and vendors in the U.S. now accept Amex, achieving 99% parity coverage with other credit card networks,” Amex tells Fortune.

Despite this progress, fee disputes continue. For instance, eBay will stop accepting Amex payments in August, citing “unacceptably high fees.” Amex expressed disappointment in this decision, arguing it limits customer payment choices.

While American Express is attracting a wave of new, young customers, it remains committed to maintaining high-income, high-credit quality clientele. The average income of U.S. millennial and Gen Z customers is about 70% higher than the industry average, and their credit scores also exceed industry norms.

Gen Z’s interest in Amex is driven by its new value proposition. “Gen Z is attracted to the luxury lifestyle—even if they can’t afford it,” says Gloria Garcia Cisneros, a Gen Z wealth manager. “Amex is framing itself in a new light, and Gen Z doesn’t like to miss out on the newest trends.”

Gen Z values the diversified perks of the card, such as entertainment and dining credits, more than just travel points. Gabriela Serpa Royo, a senior cultural analyst at Canvas8, notes that to Gen Z, “credit card perks are even better than credit, as they perceive it as free money.”

Amex also offers online education on budgeting, saving, retirement planning, and building good credit, appealing to younger customers. Grosfield believes these factors create a long runway for growth from millennial and Gen Z customers.

American Express is successfully evolving to appeal to a new generation of customers. With lifestyle perks, increased merchant acceptance, and a focus on high-credit quality individuals, Amex is poised to maintain its prestigious image while capturing a broader, younger audience.