Q4 spending by American Express’ more affluent customer base rose by 8% year-over-year, driven particularly by strong shopping activity among millennial and Gen Z consumers.
Spending picked up after a 6% growth rate in both Q2 and Q3 2024, according to CNBC. Among Gen Z users, transaction volumes surged 16% in Q4 2024, while millennials saw a 12% increase compared to the previous year.
This spending zeal was largely relegated to younger adults. American Express reported that Gen X spending grew by 7%, while baby boomer billings increased by just 4% in Q4. Despite sluggish spending growth in these groups, Christophe Le Caillec, Chief Financial Officer at American Express told CNBC that the increase in shopping among Gen Z and millennial customers “gives us a lot of optimism for 2025.”
A Concerted Effort
American Express has made a concerted effort to appeal to younger age cohorts, a strategy that seems to be paying off. Many of Amex’s young consumers are diving straight in with premium cards, like the $695 annual fee Platinum card, rather than starting with no-fee options.
Gen Z and millennial users exhibit a higher comfort level with membership and subscription fees, recognizing the value American Express provides beyond the cost. For example, the Gold card offers 100,000 membership rewards points after spending $6,000 on eligible purchases within the first six months and 20% back in statement credits made at restaurants during the initial period.
These promotions are attractive to younger adults who are often in search of experiences, as opposed to physical products. According to Le Caillac, Amex’s restaurant and travel rewards are making an impact—travel and entertainment billings rose 11% in Q4 24, compared with 8% for good and services. Much of the Q4 2024 boost in the travel segment came from airline spending.
Highly Sought After
The Gen Z and millennial customer base is highly sought after because they typically have higher incomes and credit scores than older cohorts. Many Gen Z consumers have also started investing at an earlier age than previous generations. Gen Z is highly tech-savvy, and their investment habits have been influenced by social media and gaming.
Though Amex has already shifted its strategy to reach this cohort, the wealth management industry has struggled to accommodate the preferences of the new generation of investors. Younger adults are looking for digital-first solutions that are tailored to their unique demands, and financial firms in all industries must acknowledge these preferences and adjust their strategies accordingly.
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