Did Amex Hack Gen Z or Did Gen Z Hack Amex?
Did Amex hack Gen Z, or did Gen Z hack Amex? Young cardholders are building spreadsheets to squeeze every reward out of an $895 Platinum card, and Howard Dvorkin has a different read on who is actually winning. What you'll learn: ✅What "points maxing" really involves, and the question almost nobody runs the numbers on ✅Why the Platinum annual fee climbed to $895, and what happened to the perks right after ✅The reason a card built for top spenders is suddenly in the hands of people in their 20s ✅What happens to every point you've banked the moment a payment slips The one rewards play Howard says has his stamp of approval
Video Transcript
SYDNEY: Hello, and welcome back to Dvorkin on Debt, where we talk about all things money-related with our resident expert, Howard Dvorkin. How are you?
HOWARD: I'm great.
SYDNEY: Right now we're going to get into: is Gen Z hacking the credit card system, or is the credit card system hacking Gen Z? They're opening Amex Platinum cards, which cost an annual fee of $895.
HOWARD: Yes.
SYDNEY: But what they're doing is what's called points maxing. They're making spreadsheets of all the rewards they're getting, and they're trying to hack the system so that if they use every single reward, they're technically getting their money's worth. What do you think about this?
HOWARD: Listen, if you have the time to do it, that's great. If you don't have the time, it's kind of a waste. There are some decent benefits in there if you shop at these places.
SYDNEY: So you shop at Lululemon?
HOWARD: I do, usually for my daughter or my wife. I get, I think, a $75 credit every quarter. American Express actually reduced that benefit. I used to get a gift card, which was nice, and I'd just hand it over. Now you have to go into the store, which is smart on their part, because chances are you're going to spend more than $75. They also have something with restaurant reservations.
SYDNEY: I saw that.
HOWARD: It's kind of cool, a $100 credit every quarter, which is decent. But they're usually higher-end restaurants, so if you're going there for the discount and you spend $500 on the meal and get $100 back, that's really just a 20% discount.
SYDNEY: Yeah, I went on that website. Flanigan's was not on there.
HOWARD: Flanigan's isn't, but some of the bigger, better restaurants in town definitely are. So those are good things. The travel discounts are okay too, but again, they're at higher-end hotels where you're going to spend more money. Do you get breakfast? Yes. A room credit? Yes. Early check-in, late checkout? Yes. But you're spending so much more.
SYDNEY: So much more. You might end up spending double on that hotel room.
HOWARD: Right. So you have to judge it: are credit cards making you charge more than you normally would? Studies say absolutely. These marketers know human nature better than anybody. I've sat in the same room with them, and their data is impressive.
SYDNEY: So they know that if they give you all these rewards, you're going to spend more, and there's loyalty. Why are they going downstream and enticing younger adults?
HOWARD: Because it comes down to getting into somebody's wallet and keeping the card there for a long time.
SYDNEY: But is it really worth it if you were never going to shop there in the first place?
HOWARD: Probably not. And it's a lot of work, by the way, to maximize the benefits of these cards.
SYDNEY: Points maxing.
HOWARD: Right, points maxing. But the reality is it's hard work. We have to be careful we're not spending all our time on this. There are a lot of TikTok videos out there telling you how to do it, and I sit there and think, that's so complicated, I don't want to deal with it.
SYDNEY: And it's not for everyone.
HOWARD: It's not for everybody. But why give these cards to younger people? Because in theory, the card stays in their wallet longer. The downside is (and I know we're picking on American Express, but other banks have premium cards too) if you default on a payment, you lose all the points you've saved up for years. That vacation you wanted to take? If you miss a payment, you're done. Pay late, and you don't get any benefit for the month.
SYDNEY: Right.
HOWARD: So don't try to outsmart these guys. They already know the game better than you ever will.
SYDNEY: The Wall Street Journal gave a great example of why these cards appeal to younger people: a 29-year-old named Gabrielle who has the American Express Gold card. She already likes going out to eat, going to concerts, spending on entertainment, exactly the kind of things a rewards card fits into her existing lifestyle. So is Gabrielle doing anything wrong?
HOWARD: If you're using these cards for what you'd normally use them for, eating out, shopping, concerts, great, and if there are benefits, terrific. Just make sure you pay off the bill in full each month. If it's incentivizing you to spend on things you wouldn't normally buy, that's a problem. The most incredible benefit I've seen is a 529 plan for kids.
SYDNEY: That's amazing.
HOWARD: You use your credit card instead of cash, and they put money toward your children's education. It goes into an account, I believe it's with Fidelity, where you have full discretion to invest it in the stock market, bond market, whatever you want.
SYDNEY: That sounds pretty good.
HOWARD: Anything that diverts cash into savings and grows it for education or retirement has the Howie stamp of approval.
SYDNEY: (laughs) So what would you say to everyone spending all their time points maxing the Amex card?
HOWARD: No matter how smart you think you are, the bank is smarter. They have decades of data proving that if they give you a reward program, you're going to spend more, and if you don't put that extra money into savings, it's going to result in negative activity for you.
SYDNEY: Well, thank you so much, Howard. Thank you for joining us and talking about this with us.
