When Chase and American Express unveiled plans to enhance rewards for their luxury credit cards—and raise their fees—it seemed that these lenders were focusing on the most rock-solid customer base amid economic upheaval. Though macroeconomic factors have played a part in the renewed focus on affluent customers, these moves involve much more than is apparent at first glance. Brian Riley, Director of Credit Payments at Javelin Strategy & Research, said smaller credit card issuers can take critical cues from the top issuers’ strategies. “The timing of doing this is good because they’ve got to integrate this portfolio, and all of a sudden Chase is going to lose its position as top issuer—it’s now going to be the new Capital One. With all the chaos, the timing is right for Chase and Amex to readjust this piece.” The issuers are recalibrating by addressing the three best segments in the credit card market. First are the big spenders, who can afford to make the substantial investment in a product that others receive for free. Next are the strategic buyers, who are willing to pay a high fee for the potential to reap high rewards. The final segment is responsible cardholders, those who have FICO credit scores above 720. Another attractive trait about the premium segment is that Discover doesn’t have an offering in this space. Capital One does—with its Venture X card—but the$395 annual fee card doesn’t deliver the same caliber of rewards as the Chase and Amex products do. “Capital One and Discover are middle-market players, but they do have some great accounts,” Riley said. “So here the two biggest players on the premium side aim directly at the top-end segment, so that’s a big deal. “There are subsegments within that, because you also have the smaller banks in the mix. Here, you are taking on little community banks; you’re marching into their area. You’re presumably going to be taking the top of all their customers and leaving the middle-market stuff there, so the portfolios become less sound outside of Chase and Amex.” Smaller banks won’t be the only institutions affected as Amex and Chase duke it out over premium cards. Other top issuers, such as Bank of America, Citi, and Wells Fargo, will have to shift to defend their top customers. However, the affluent cardholder base isn’t the only segment that these institutions must safeguard. “Another big thing here is that—for the first time—Chase is adding their small-business card into the mix,” Riley said. “Now, Amex has always done that in the Platinum card, but it shows you how Chase is addressing the market. That is a real big focus, and it’s a great time to be in the market because with small businesses—yes, some will fail—but many will succeed, and it’s a good choice.” Investing in the SME market is a strong strategy because typical card spending ranges from $20,000 to $50,000 per month. The arrival of Chase means other issuers must reevaluate their offerings to this sought-after segment. Because two of the strongest credit card issuers are enhancing their premier reward programs, other issuers should consider following suit. However, this should be done only if the issuer’s business allows for it. Adding 100 basis points to a card might make it more competitive but also makes it less profitable. Another area where smaller institutions can follow in the footsteps of top issuers is by benchmarking their card data. Companies like Chase and Amex are constantly adjusting their products based on market conditions, as evidenced by data from Javelin’s Card Bench, a competitive intelligence card acquisitions tool. In addition to fine-tuning their offerings, issuers should also constantly reevaluate their relationships with their customers, across all segments.