American Express: Affluent Customers Don’t Leave Home Without It

Key Points

• American Express reported no slowdown in its customer spending in Q1 2025.
• American Express has an affluent customer base underscored by the average annual household income for its Platinum card members is $400,000.
• Millennials and Gen-Z made up 60% of new customers (3.4 million) and 35% of card spending in Q1.

American Express Co. NYSE: AXP is a cut above the rest when it comes to the credit and charge card business. They cater to a more affluent, status-conscious client base comprised of Millennials and Gen-Zers who like to spend money on travel and entertainment. Despite fears of a looming recession, American Express reported first-quarter 2025 results showing no signs of a slowdown.

Even if a recession were to happen, the company is buffered thanks to its wealthier customer base. The average American Express Platinum card member has a monthly household income of $400,000. 

This makes the company more immune to economic volatility. However, this finance sector leader offers more than just cards. American Express competes with major credit card networks Visa Inc. NYSE: V and Mastercard Inc. NYSE: MA.

2025 Is off to a Robust Start for American Express

The first quarter of 2025 provided much comfort to shareholders who were concerned about the company suffering from a pullback in consumer spending. The company posted earnings per share of $3.64, beating consensus estimates by 17 cents. Revenues grew 7.4% year-over-year (YOY) to $16.97 billion, beating $16.94 billion consensus estimates.

Consolidated provisions for credit losses fell to $1.2 billion. Consolidated expenses rose 10% YOY to $12.5 billion, driven by higher variable customer engagement costs. The Q1 net write-off rate was 2.1, which was flat YOY. American Express added 3.4 million new cards, with Millennials and Gen-Z customers accounting for more than 60% of new accounts.

Travel and Entertainment Metrics Continue to Grow

Despite recession concerns, American Express’s affluent customer base didn’t show any cracks in the armor during Q1 2025. Within its Travel and Entertainment business, restaurant spending rose 7%, lodging spending rose 5%, and spending on airlines rose 3% YOY.

American Express Has Scaled Up Its Financial Services

While consumers may believe American Express is still a credit card company, the reality is that they have scaled up their services. They even have a bank charter through its FDIC-insured American Express National Bank (AENB). This enables them to provide banking services, including checking, high-yield savings accounts, as well as personal and business loans and lines of credit.

Their well-established travel services include travel agents, insurance, and car rental with access to various high-end hotels and resorts. The Rewards program is also a huge draw, enabling customers to earn Amex points towards products, services, trips, and entertainment access.

The company has evolved into a financial services powerhouse. Net interest income has been rising consecutively from $3 billion in Q1 2023 to $4.17 billion in Q1 2025, up 11% YOY.

Growing with the Company: Producing Generational Customers

American Express has a more affluent and younger customer base. This leaves a lot of room to grow, and the company offers many upgrades as young customers progress through their careers. Accessing its many different cards depends on the customer’s income, credit scores and spending habits.

As customers grow wealthier and build their credit history, they can receive invitations to upgrade to higher-level premium cards like the Gold, Platinum or Centurion cards.

These cards come with annual fees and lots of additional perks. For example, the Gold card has a $325 annual fee but offers 4X points for certain Travel and Entertainment categories.

The Platinum card has a $695 annual membership fee with many more benefits, like 5X points and access to the American Express Global Lounge Collection at select airports. Card fee revenues for Q1 2025 surged 18% YOY to $2.3 billion. 

Millennials and Gen-Z customers provided around 35% of its U.S. cardmember spending in Q1. Gen-X customers comprised 36%, and Baby Boomers comprised 29% of Q1 2025 spending.

American Express Reaffirms 2025 Guidance With Little Mention of Tariffs

The company issued full-year 2025 EPS be $15.00 to $15.50 or adjusted EPS growth of 12% to 16%. Revenue is expected to grow 8% to 10%, subject to the macroeconomic environment. The projections incorporate a peak unemployment rate of 5.7%. Spending trends in Q2 are expected to be identical to Q1 2025.

The conference call only mentioned tariffs on a single instance during the Q&A session regarding which segments of their business would face the most pressure if steeper tariffs followed through.

CFO Stephen Squeri responded that small businesses would be most sensitive, “And so, but small businesses, I think small businesses are the ones that we would pay a lot more attention to, just because costs may not make -- they could be put in a situation that will not be able to compete effectively in the market. So, we'll continue to look at small businesses as this situation evolves."