Younger Cardholders Boost AmEx Spending

American Express Affluent Cardholders Boost Spending

American Express’ affluent cardholders got comfortable spending more freely again late last year, according to Chief Financial Officer Christophe Le Caillec. Spending on AmEx cards jumped 8% year over year in the fourth quarter after slowing from a 7% growth rate early in the year to 6% during the second and third quarters, according to the firm’s earnings presentation.

Generational Spending Habits

While the year-end pickup was seen across all customer segments and geographies, it was especially fueled by millennials and Gen Z users, where transaction volumes jumped 16%, up from 12% in the third quarter. Older groups were more restrained with their cards. Gen X customers spent 7% more in the fourth quarter, while baby boomers saw billings rise just 4%.

Optimism for 2025

"We had very strong growth from Gen Z and millennials, and that 2 percentage point acceleration gives us a lot of optimism for 2025," Le Caillec said. Elevated transaction levels have continued into the first three weeks of this year, he added.

Spend Patterns

Younger Americans are said to spend more on experiences rather than goods, and that is reflected in the results from AmEx, which along with rival card issuer JPMorgan Chase, dominate the market for high-end credit cards. Travel and entertainment billings rose 11% in the quarter, compared with 8% for goods and services. The boost in travel came from airline spending, which rose 13%, with spending for business class and first class airfares up 19%, according to Le Caillec.

Stock Performance

AmEx shares fell more than 2% in midday trading Friday after the company reported earnings and revenue that were roughly in line with analysts’ expectations. Shares of the New York-based company have been on a tear over the past year, hitting a 52-week high on Thursday.

Analyst Insights

"We are encouraged by accelerating billings growth as we believe it will be a key factor for Amex to meet its aspirational target of at least 10% revenue growth," William Blair analysts led by Cristopher Kennedy wrote Friday in a research note. "We remain buyers on any pullback."

Conclusion

American Express’ affluent cardholders’ increased spending has boosted the company’s revenue growth, with millennials and Gen Z users driving the growth. The company’s optimism for 2025 is fueled by the strong growth from these younger generations.

Frequently Asked Questions

Q: What was the growth rate of spending on AmEx cards in the fourth quarter?
A: 8% year over year

Q: Which age groups saw the highest growth in spending?
A: Millennials and Gen Z users, with transaction volumes jumping 16%

Q: What was the growth rate of travel and entertainment billings in the quarter?
A: 11%

Q: What was the growth rate of airline spending in the quarter?
A: 13%

Q: What was the growth rate of spending for business class and first class airfares in the quarter?
A: 19%