WSJ Your Money Briefing - Your Credit-Card Company’s Latest Venture: Exclusive Experiences

Episode Date: August 22, 2024

Credit-card companies like Amex, Chase and Capital One are opening upscale lounges for their high-end customers. Wall Street Journal personal-finance reporter Imani Moise joins host J.R. Whalen to discuss other exclusive perks being offered. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street. Here's your money briefing for Thursday, August 22nd. I'm JR Whalen for the Wall Street Journal. Credit card companies are upping the ante when it comes to rewards for their biggest spenders. Among the perks, high-end lounges.

It was really swanky. So one of the things that Amex said, and a lot of these card companies said, is that they hire interior designers specifically to design a space so that it feels upscale and that anyone who steps foot in them really feels like they're a VIP and they're experiencing something exclusive. Wall Street Journal personal finance reporter Amani Moise will join us after the break. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast. Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI.

OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street, oracle.com slash wall street. The newest perks offered by many credit cards include exclusive lounges at places like concerts and sporting events. Wall Street Journal personal finance reporter Amani Moise joins me. Amani, when did credit card companies start offering these types of rewards? Some of these lounges have been around for decades.

Anyone who's been to the US Open probably knows that Chase and American Express have a pretty large presence there. But what's happening now is that credit card companies are really upping the ante and opening the US Open probably knows that Chase and American Express have a pretty large presence there. But what's happening now is that credit card companies are really upping the ante and opening up these lounges in more places. Which credit cards offer them? A lot of these lounges are reserved for people who have the most premium credit card that a company may offer.

For example, a lot of the Chase lounges are reserved for Chase Sapphire Reserve customers and American Express Centurion Lounge is really only for the black card holders. And that's their highest tier of card? Yes, correct. So most of these lounges are not just for any card holder. Sometimes they are. So the most exclusive lounges

will be for the top tier card holders, but some issuers are also opening cards that are open to all of their customers. For example, the Wells Fargo Lounge at Hudson Yards, any type of Wells Fargo account can get you in. We're also around the country. Are there credit card companies opening them up? They are mostly in big cities for now.

Chase also has a lounge that works similar to its Madison Square Garden Lounge in Chicago at the Chicago Theater. They also open with festivals. So with Lollapalooza, which happened in Chicago earlier this summer, there was a Chase lounge there and Amex has a lounge in crypto.com arena the old Staples Center in Los Angeles What do people experience when they go there? Many of the lounges also offer food sometimes it's to order and sometimes it's for free and there's usually a bar as well Are these different from the lounges we often see in airports?

Yes, so what airport lounges we often see in airports? Yes. So what airport lounges are known for is complimentary food, open bar. These lounges tend to be a little bit more restricted. So for example, at Madison Square Garden, the food is free, but the bar is a cash bar. Have you been to any of these lounges? Yes, I got to sample quite a few of these lounges. I went to the Wells Fargo lounge at Hudson Yards I went to the chase lounge at Lollapalooza and Madison Square Garden and I also got to speak with some American Express representatives at the Centurion, New York Anything for my art What was the Centurion like it was really swanky?

So one of the things that Amex said and a lot of these card companies said is that they hire interior designers specifically to design a space so that it feels upscale and that anyone who steps foot in them really feels like they're a VIP and they're experiencing something exclusive. What's really special about the American Express Centurion Lounge is the view. So it's in the tallest building in midtown and you could really see everything from Brooklyn to New Jersey and straight through Central Park. What kinds of events do the credit card companies organize? At a place like the Centurion New York they'll have special brunches where they'll bring in chefs or they may do meet-and-greets for card holders there. Capital One also does a

lot of travel events. For example, for the International White Truffle Fair in Italy they've organized a four-day trip that includes a truffle hunting experience and a pasta making class with a Michelin-starred chef. They also have an exclusive cardholder experience during New York City's Fashion Week where if you purchase that package, not only do you get a seat at a runway show, but you have dinner with a designer afterwards. Credit cards have been offering rewards like cash back or airline miles for years. Why did they add this tier of perk?

Because it helps them stand out, right? So credit cards, they are commodity products. When it comes to paying for things, they all work in very similar ways. And one Chase executive put it really well. When you use your Chase card to buy something and it works, you don't say, hey, thank you, Chase, because it's a utility.

But when you use your card to get into a lounge, that brand is much more at the forefront of your mind. How popular have they become? They are very popular. One of my favorite stats that I came upon in my reporting is that traditional credit card rewards like miles, cash back, things like that, they tend to be underutilized.

Americans had over $33 billion in unused credit card rewards at the end of 2022. By comparison, these experience based rewards tend to sell out as soon as they're available. What do the companies hope that their card holders get out of this? Well, they hope that number one, you have a great experience and number two, that you tell a friend. Most of these lounges give card holders a plus one or in some cases cases even a plus four. And what they're hoping is if you bring along a friend who's not a cardholder, maybe they also have a good experience and they're convinced to open up an account as a result of that. If somebody's going to a concert and a credit card company has some involvement here, how

does the lounge fit into their experience? So it's really a pre-concert experience. For example, at Madison Square Garden, the Chase Lounge opens as soon as doors open. So that's usually about an hour before the concert starts. Card holders can come in, grab a drink, grab some food, relax for a bit, and then make their way to their seats in the bleachers closer to concert time. You mentioned that these lounges and rewards

have become popular. Do the banks and credit card companies run the risk of these experiences not feeling so exclusive if they attract crowds of people? It's too soon to say on that front. Demand for these types of experiences still outstrips supply. So we saw this with Capital One earlier this year when they had their viral moment in partnership with Taylor Swift, and they actually had a few angry card holders, right, because they had a card but they still were not able to get these Taylor Swift tickets. So what they've done in response is add more experiences for different artists or different

kinds of experiences, whether it be music or things like the truffle hunting, to keep up with demand. So until we reach that point where people don't want to participate in these things, they'll continue to be popular. How can people find out which types of lounges and rewards their credit card company offers? Every credit card and issuer works slightly differently, so I'd say the easiest way to find out is to call customer service and ask. That's WSJ reporter Imani Mouiz, and that's it for your Money Briefing. Jay's Hannah Meow to discuss how the oldest members of Gen X, approaching 60, have struggled to save for retirement and are not able to stop working anytime soon.

This episode was produced by Zoe Culkin with supervising producer Melanie Roy. I'm Jay R. Whalen for The Wall Street Journal. Thanks for listening. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast. Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI. OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less, like Uber, 8x8, and Databricks

Mosaic. Take a free test drive of OCI at oracle.com slash Wall Street, oracle.com slash Wall Street.