Unless you’ve been living under a rock… you’ve probably heard the news. American Express is introducing some rather significant changes to its program (Membership Rewards) and to a lesser extent its co-branded frequent flyer cards.
On the positive side, they have provided members with plenty of notice. April 15, 2019, is a date you should mark in your calendars. Those carrying big points balances within the Amex Membership Rewards program will have 5 months to think of a redemption strategy or face at value reduction of at least 50%. Personally, I will be holding on to my points for as long as possible to see if any redemption opportunities come up. If you’re big on Velocity Frequent Flyer points though, now might be a good time to move your points since there’s a 15% transfer bonus on.
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Why is Amex making these changes?
Since the RBA changes a few years ago, earning points has become harder. Although Amex wasn’t really affected by this, they have been working on getting more merchants onboard so card members can use Amex in more places. To do that, they have been lowering their fees to acquire more merchants (according to Amex). Naturally, it’s the merchant fees that pay for the points we earn on spend so lower merchant fees = less points.
Since the reduction on Visa and MasterCard earn rates, Amex has been in a pretty competitive position with higher earning cards. Unfortunately come April 2019, that competitive points earning advantage will be trimmed down significantly.
Amex Frequent Flyer Card Changes
The least affected cards are those that are co-branded with Qantas and Virgin Australia. These cards sweep points to your frequent flyer account on a monthly basis and will see a reduction of around 18% or 0.25 points per dollar on the points earned from everyday purchases.
Amex has designed a very clear information page which shows you exactly how each card is impacted. Instead of reinventing the wheel, I will link to each card section on their site so you can see the points earn and redemption rates in a neat table.
Check the Co-brand Frequent Flyer card rates here: https://www.americanexpress.com/au/credit-cards/membership-benefits/rewards/rewardschanges/
Amex Membership Rewards Changes
The most significant changes are the ones being introduced to the Membership Rewards program. As you all know, there are a few different versions for Membership Rewards (which in my humble opinion was a great selling point for Amex), there’s Membership Rewards Gateway (lowest tier), Membership Rewards Ascent (standard tier) and Membership Rewards Ascent Premium (top tier which allows transfers to Qantas). A big reason people hold multiple Amex cards is because of the different membership tiers and various benefits this brings.
Unfortunately, Amex is simplifying the program so the transfer rates will be the same across the board. In short, points will transfer to the popular frequent flyer programs at a 2:1 ratio (right now it’s 1:1 in most cases).
Earn rates on the various cards that earn into Membership Rewards are also being reduced. Let’s have a look at the changes on some of the most popular cards.
Amex Platinum Charge Card
This is the top tier card in the Amex lineup (apart from the Centurion which is by invitation only), with a hefty annual fee of $1450 this card targeted to big spenders and luxury travellers. The perks that come with the card are excellent and so is the current earn rates which has bonus categories for dining and travel. Right now the card earns 3 points per dollar on restaurants and 2 points on travel spend. Unfortunately, from April 15 these bonus categories will be removed, and a flat earn rate of 1.125 (effective earn rate) will be introduced. On the upside, the $300k cap on points will be removed, and utilities and insurances payments will also earn at 1.125 (up from 0.5). Government spending, however, remains the same at 0.5 frequent flyer points per dollar. On the business variant of this card, the same earn rate will be introduced, and bonus categories will be removed. The Platinum Reserve which is a free companion card to members who have a Platinum Charge card will see earn rates similar to those of the Amex Explorer (more on that below) with the exception of earning 0.5 points per dollar on government spending.
See the complete earn and redemption rates here
Amex Platinum Edge
One of my all-time favourite cards… it’s sad to see the earn rates on the Platinum Edge come down as well. While right now the Edge earns a massive 3 points per dollar at the supermarket, this will be cut back to 1.5 points per dollar. The earn rate at the pump which now attracts a 2 point per dollar earn rate will also be reduced to 1.5 points per dollar. Every day spend will be down 50% as well with the Platinum Edge earning only 0.5 points per dollar, down from 1 point per dollar.
See the complete earn and redemption rates here
Amex Explorer
The Amex Explorer is a relatively new card in the product lineup, and it quickly became the #1 card for many savvy points collectors for many reasons (if you know you know). It’s an all-around powerhouse, and personally I use this card for 80% of my total spend. I think today Amex broke many hearts around the country when they announced the Explorer will be earning 1 point per dollar, down from 1.5
On the upside, this card will now also earn 1 point per dollar on government spending, up from only 0.5
See the complete earn and redemption rates here
Amex Essential
The no annual fee card is a great entry point into Membership Rewards. The reduction of points earned is less significant compared to the premium cards. From April 15 the effective earn rate will come down to 0.625 from 0.75 points per dollar. Government spending will increase slightly from 0.375 to 0.5 points per dollar.
See the complete earn and redemption rates here
My personal thoughts on all of this
The biggest Amex brand ambassadors have always been their customers. It’s a combination of excellent customer service, functional tools to manage your accounts and a rewards program that rivals the rest. Amex has some of the most loyal and savvy members, and I feel today for many, that loyalty will be questioned.
From what I can see in the points community, a lot of people will be re-evaluating their Amex cards come April. It will be interesting to see what offers Amex will bring out after April to retain the loyalty of its members and to attract new members to join.
