Throughout 2019, American Express has been all over the points and miles news. And, unfortunately, it hasn’t been for anything good. This post will diverge from my normal content as I explain why I’m frustrated with American Express lately.
My frustrations are sorted like a card review, starting with the sign-up bonus and ending with perks. Many of my frustrations are commonly heard about in the points and miles world and they involve recent news.
Once Per Lifetime Rule
Chase’s 5/24 Rule is one of the most restrictive application rules in the industry. However, American Express’ Once Per Lifetime Rule affects everyone regardless of 5/24 status. I do not like how product changes, upgrades, and downgrades count for the once per lifetime of having a certain card. That’s because you cannot get that card’s sign-up bonus again. This rule gives disgruntled cardholders incentive to cancel and apply for a desired card outright to get the bonus.
For example, if I decide to upgrade my Blue Cash Everyday to the Blue Cash Preferred, I would forgo earning a sign-up bonus on the Preferred. I am better off applying for the Preferred to get the bonus. The exception is if Amex offers me an upgrade offer. At that point, I would compare the upgrade offer to the sign-up bonus and decide which is more valuable.
Earning Structure Gimmicks
American Express’ gimmicks continue when you use their card. What, how, and where you purchase must all be thought out before swiping. This is not the case with most other issuers as their coding is more straightforward, especially with Visa and MasterCard network cards.
Bonus Category Limitations
There are certain types of purchases that only code for earning just one Membership Rewards (MR) point per dollar or 1% cash back.
For example, the personal and business Platinum Cards appear to both earn 5x points on airfare. However, the method of booking determines if you actually get the 5x points. The personal version earns the 5x points if you book directly with the airline or on amextravel.com. Conversely, the business version only earns the 5x if you book on amextravel.com. You do not get the extra points if you book directly with the airline on the Business Platinum Card. Personally, this little rule is ridiculous. American Express should let Business Platinum cardholders earn points the same way as personal Platinum cardholders do.
American Express also does not have a list that shows how different merchants code under their network. The only way to find out is to make a purchase and hope that it earns more than one MR point or 1% cash back.
Gift Card Purchases Do Not Earn Points
Recently, American Express banned gift card purchases from earning points on all of their cards. This ban also applies to cash back earning cards like the Blue Cash Preferred. American Express has access to Level 3 data which tells them what you are purchasing with their card(s). Many people have purchased gift cards to hit sign-up bonuses and earn extra points for everyday spend.
Lack of Hotel Transfer Partners
American Express has the biggest list of transfer partners in the industry. But unlike Chase, American Express has no valuable hotel partners. They have Marriott, Hilton (2 Hilton Honors points for 1 MR point), and Choice Privileges. And none of the partners’ points are worth more than 1 cent per point (CPP). Surprisingly, Hilton’s points have the best value at 1 CPP, assuming a 0.5 CPP valuation for Hilton Honors points.
I would rather book hotels with cash given the terrible values that American Express and their hotel partners offer. Fortunately, Chase Ultimate Rewards provide more valuable hotel alternatives such as Hyatt.
One of the concepts that I learned about going to college for business is the cost-benefit analysis. This analysis is one that I do often with PYCR as I compare the annual fee of a given card to the value of benefits offered.
Since August 2018, American Express has raised annual fees (costs) on several of their cards while adding benefits that are of varying use. Your mileage may vary here as different people use different benefits. However, many of the added benefits have “hoops” that you must “jump through” in order to take advantage of them.
The credits that come with a plethora of premium Amex cards are supposed to save cardholders money, add value, and justify annual fees. However, they are one example of a benefit that has restrictions that prevent you from using them easily and properly.
For example, the $200 Uber credits on the personal Platinum Card are useless for many people because of the way they are divided up. You get 11 monthly credits worth $15 and one $35 credit for the month of December. The credits are divided up like this so that fewer people could use them and American Express could save money. But if this is the case, why have the benefit at all?
The answer is to have a means to justify raising annual fees on their cards. Both versions of the Platinum Card used to cost $450 per year. In 2018, American Express raised the fees to $550 (personal) and $595 (business). Furthermore, the Gold Card used to cost $195 per year (waived the first year). But American Express rebranded the card, added the food credits, and raised the annual fee to $250 (NOT waived the first year).
The same logic can be also applied to the following credits:
- Airline Incidental credits
- Food credits (Personal Gold)
- Saks 5th Avenue credits (Personal Platinum)
- Dell credits (Business Platinum)
Priority Pass Restaurant Access
American Express also did not like that so many people were eating at Priority Pass restaurants. So they decided to remove access to them for Platinum and Centurion cardholders. Eating at enough of these restaurants throughout the year could justify the Platinum Card’s hefty annual fee. But now, cardholders must find other ways to extract value from their cards.
This move is saving American Express money. But they are removing added value from their cards and consumers in the know are not happy. An unintended consequence of this restriction is Platinum cardholders cancelling and switching to the Chase Sapphire Reserve or Citi Prestige. But that’s what happens when you remove too much value from a product. Consumers can and will find more value (benefits) elsewhere.
For the last nine months and counting, I have been lucky enough to cover news regarding Amex here on PYCR. Many people are as frustrated with the issuer as I am and have every right to be. However, the bottom line is that American Express is tightening their rules because they trying to save money. The challenge for them is to straddle the line between adding value and keeping customers happy.