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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:
- 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.
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?
Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.