Is It Time To Downgrade American Express With Death of Gift Card Credits?
American Express has been on a hot streak of late. A hot streak of dumping value from their cards, which could be because their costs are rising. They didn’t go all scorched Earth like Citi did with their travel benefits but they are toeing that line for sure. Late last year I called them the least transparent lender in the business, and it looks like they are doubling down on it.
In recent weeks they have removed restaurants from their Priority Pass memberships, clawed back referral bonuses even after encouraging them and now they closed the loophole on their airline incidental credits. To be fair that is the way it was always supposed to be but American Express let it go on for close to a decade before finally tightening the belt. It puts their credits at a serious disadvantage to their competitors that make it a true travel credit. All of this has me thinking, is it time do downgrade American Express cards overall?
What Does This Change Mean?
The terms of the American Express airline incidental credits have always been intended to be used for the following:
- Checked bag fees
- In-flight purchases
- Seat selection/upgrade fees
- Flight change fees
- Lounge memberships and day passes
- Pet fees
- Phone reservation fees
But in the past gift cards purchased online worked as well. This put the value of the incidental credits in the 85-90% range, since that is what you can sell most airline gift cards for.
With this change I would drop the value down to around 60% of the face value. Most people will have bag fees covered from a co-branded credit card, status or hopefully they are team carry on (like me!). That makes the credit somewhat useless for bag checking which is one of the larger options. The best choice may be a seat selection/upgrade fee.
If you fly Spirit or Frontier often this could be a good choice for you with all of their extra charges, especially Spirit’s big front seat. I would put the value close to 100% for frequent Spirit/Frontier fliers since they will be hit up with these fees on every flight. It could still be useful for upgrading to first class or economy comfort on other airlines too. But that is a luxury that you would be forced into using.
Does Anything Else Still Work
There are still a few things out there that are working that are in, shall we say, the gray area. I am not going to share them here since people will blame me for ruining them 😉. I will say you should check the data points on Flyertalk where things like this are shared pretty much daily:
- Alaska Airlines
- American Airlines
- Delta Airlines
- JetBlue Airlines
- Southwest Airlines
- United Airlines
You will find some decent options for a few of the airlines at least.
Should we Downgrade the American Express Ecosystem?
There have been quite a few negative changes over a short period of time. As humans we tend to overreact. Re: me cutting up my Radisson card when they eliminated the BOGO award night bonus. Now I wish I still had that card for the 40K anniversary bonus alone.
I wouldn’t downgrade American Express as a whole too much since this doesn’t affect the Memberships Rewards program. It also doesn’t change the fact that Amex has the best spending categories of anyone with big bonuses on groceries and gas, plus one of the best non bonus spend cards on the market.
Having said that it DOES change how we should look at individual cards. Since the value of the airline incidental credit will vary widely depending on how a person decides to use it. If we knock it down to 60% of the face value that is only $120 off of the Platinum card annual fee. That changes the whole keep/cancel debate, especially when you throw in the Priority Pass devaluation. Let’s take a look at each card that comes with an airline incidental credit:
-
Gold Card
- I don’t think this changes the value much since it is only a $100 credit and the decision to keep or cancel will depend on how much you spend on restaurants and groceries. If you are maxing those out then you will keep the card regardless.
-
Hilton Aspire card
- I have called the Aspire the best perks card out there many times. With this change that $250 airline incidental credit drops to a value of $150 at 60%. When you throw in the annual free night and the $250 resort credit you should come out at least break even on the $450 annual fee. But it is more important than ever to use that resort credit in full. If you struggle to do that this card is probably not a long term keeper for you anymore.
-
Platinum Card (Business & Personal)
- Nothing takes a hit more than the Platinum card lineup. In the first year they still make sense if you can snag one of the massive 100K welcome offers. But in the second year it was already kind of murky and with these changes it probably tips the scales to a closure. Since Amex likes to spread the other Platinum card credits out by months or semi annually, hoping for breakage, they are less valuable. Throw in a reduce in the value of their Priority Pass, overcrowded Centurion lounges and a tougher to use airline incidental credit and you have a recipe for cancellation. They better have some retention offers ready because that may be the only saving grace in year 2, 3 and onward.
Final Thoughts
American Express is thinking short term here in my opinion. They are already losing the arms race for premium cards to Chase, something they owned for decades. Now they are shedding benefits like they are Citi, all because costs are on the rise? Make your credits easier to use Amex and just lower the amounts – that would be a fair trade off at least. I would take a lump sum $100 Uber credit over $200 spread out. Give me a true $150 travel credit over a $200 incidental credit and I can live with it. Less can be more in certain instances. You would probably end up with close to the same out of pocket cost but happier customers. These companies really need to start doing focus groups with people from our community 🤣😉.
Share your thoughts below. What cards are still a keeper to you and why? And what ones do you plan to close with these changes and why?
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We still use AMEX PLT for my company but have dropped personal card in favor of my Sapphire Reserve which is now my everyday card. There are too many things good about it and AMEX is going down hill I have been a loyal card holder for 20 years and have seen my “never to raise” annual fees we have 10 15 co cards out there. For business it works well with the ability to incur massive amounts all to be paid at the end of the month never the less business wise it works. personal it sucks
The “mostly” uncapped spending is pretty great for businesses
[…] Speaking of Amex: Is It Time To Downgrade Amex With Death of Gift Card Credits? Not just downgrade, cancel/close them! There goes my invite to be wined and dined by Amex for my…lifetime, another sad lol at me! Or check out how Dan used his: Here Is How I Used My 2019 Amex Airline Fee Credit. And rest assured the Amex RATeam will not rest until they take care of the remaining loopholes. […]
One of the most appealing aspects of the Gold card was the ability to spend up to $25K at supermarkets for 4x on spend *including* gift cards.
According to Doctor of Credit, this week AMEX unceremoniously changed their ToCs to specifically remove gift cards from 4x point bonuses. Can you confirm this is accurate? If so, the Gold card moves way down in value. Thanks in advance.
From what I read it was only on the BB+ card for now but it is something to be concerned about for sure.
I was hoping to be able to use the airline credit on Air France for my usual upgrade to Premium Economy in Sept. Will the credit work for Air France–I was assuming if I show it as my airline of choice it would? And, yes the Diamond status is no good really for stays at Hilton. Is there a good option for me to match my Diamond status somewhere? Looks like I may keep it for 1 year and then downgrade it.
Shawn–good post–thanks!
Air France isn’t an option – only US carriers are. If you book it through Delta and have Delta as your option and pay for it through Delta’s website I think that may work but I don’t know for sure.
Have both personal and business platinum. And sadly my business travel has been null this year. So stuck with no way to use travel credits. I will be closing one if not both of my cards as that travel credit USED to offset my fees.
I would keep the biz card if you end up keeping one. That 1.5 cent redemption is a decent option to have in case of need.
overcrowded Centurion lounges
==
Maybe it will get better because more people may cancel the plat.
Could be the silver lining 🙂
About done with amex. Got the popup for the lousy everyday. Just wanted the 15 months to spread a purchase out. I get an email every day for the big bonus on hilton cards i already have. Had the delta gold in my name got 6 short haul flights out of the bonus. Got one in my wifes name we wont even get 3. Going to burn what i have and go to cash back.
I am still stuck in pop up purgatory which killed me on the latest round of Delta offers 🙁
I downgraded my Aspire to the no fee version. But I upgraded my Gold to Platinum, only 60,000 MR offer, but gives me a year to decide about the future. My Chase cards look better and better though, which worries me, Chase my follow suit.
I don’t see them changing their credit at all. They may trim restaurants from PP but I don’t think it would happen within the next year.
Closing both Platinums, keeping Gold, BBP, and Aspire.
That is where my thinking is as well
Plus being Diamond in Prague didn’t get me an upgrade to a suite, even though they were available- still wanted me to pay $125 more a night! Instead they gave me a room with no view. They gave golds lounge access also, which made it very crowded. So not sure being Diamond even has lots of advantage.
It isn’t a ton better than gold in my experience except for guaranteed lounge access.
I’m rethinking the Hilton Aspire now that this has happened, plus removing restaurants from Priority lounges. I really see it also as a break even if I can’t use it for Southwest credit cards anymore. Wish I’d also done hubby’s Aspire card before all the changes! I really shouldn’t wait because things are changing rapidly!
I 100% agree – give me a CLEAR travel incidental benefit for even less than the $200 one and I would be perfectly fine. This is silly and irritating when compared to how other brands reimburse travel credits. Tempted to cancel amex platinum.
It is something many people will be debating come renewal time. Even people who have carried the card long term.
Are you sure AMEX will allow the credit to be used to upgrade seats after purchase(I assume)? Delta happens to be my airline of choice and they always offer buy-ups to EC and F(their often insane prices notwithstanding). If we can use the Gold/Plat credits to move up that might be an OK use, but I’ve read conflicting reports of this use.
It should be an approved purchase and you should be able to get it credited even if you have to reach out. I have used it in the past on Delta but it has been a few years.
I upgraded to comfort + and it did not trigger the credit on Delta. I did this via desktop and my phone.
A Datapoint: I have the platinum card with Delta as my airline of choice. I also got the Gold card and just because I flight spirit once in a while to visit my parents in FLL, I chose Spirit instead of Delta. On my first flight. The extra fees came around $60 (round trip). I paid the whole ticket with my gold card and the whole $100 were credited. It’s just one data point, and I don’t know if this works or not. I was not expecting the whole $100 to be refunded
Interesting – thanks for sharing Ricardo. What was the total price of the ticket when the $60 in fees were added on?
$252
Nice – I hope it works next year for my Aspire credit 🙂