American Express (Amex) has announced a significant devaluation to its Membership Rewards program. From 15 April 2019, most Amex cardholders will earn fewer points when spending money on their credit cards.
Changes to Amex earn and burn rates
To summarise the changes, earn rates on Amex’s range of direct-earn Qantas and Velocity Frequent Flyer cards are being reduced by 0.25 points per dollar across the board. Meanwhile, Amex Membership Rewards points will soon convert to airline frequent flyer miles at a reduced 2:1 rate.
There are currently four different Amex Membership Rewards programs in Australia for personal Amex credit cards:
- The Amex Platinum Charge card earns Amex Membership Rewards Ascent Premium points
- The Amex Platinum Edge card earns Amex Membership Rewards Ascent points
- The Amex Explorer and Amex Essential cards earn Amex Membership Rewards Gateway points
- David Jones Amex cards earn David Jones Amex Rewards points
Currently, points in the Amex Ascent and Ascent Premium programs can be converted to most airline frequent flyer programs at a 1:1 rate. Gateway points convert at a 4:3 rate. But from 15 April 2019, the conversion rate will be 2:1 across the board.
This does mean there are no changes to David Jones Amex Rewards transfer rates, which are already 2:1. However, David Jones Amex cardholders that have opted-in to earning Qantas points will earn fewer points from 15 April.
There will be no changes to the range of transfer partners; Qantas Frequent Flyer will continue to be an option for Amex Platinum Charge cardholders. And Platinum Charge, as well as Platinum Edge customers will still be able to transfer points to Virgin Atlantic Flying Club. There are also no changes to SPG/Marriott transfers from Amex, although Hilton Honors transfers will be devalued to a 2:1 conversion rate.
There are also changes to the rate at which Amex points will be earned on some credit cards following the Amex devaluation.
Currently, many Amex credit cards offer extra points for money spent with restaurants, airlines, supermarkets and petrol stations. These various earning categories will be streamlined, resulting in fewer tiers… and fewer points on some purchases. But the earn rates on some categories, such as utility payments, will actually increase for some Amex cardholders. Point caps are also being removed on cards that previously had them.
Admittedly, the changes are quite complicated. You can find a summary of the changes for each Amex credit card on the American Express website.
Greater Amex card acceptance, fewer points
Amex says that the changes are a result of the lower merchant fees it is collecting nowadays on credit card payments. Over the past couple of years, Amex has been lowering the fees it charges to many businesses for accepting Amex card payments. This has had the effect of increasing the acceptance of American Express card payments. But this has also squeezed Amex’s margins to the point where a devaluation of the rewards program is necessary.
In July 2017, the RBA began regulating Visa and MasterCard interchange fees in Australia. Since then, Amex has been a standout performer in terms of rewards earned as it was not affected by these changes. Following the April 2019 devaluation, Amex will still be a competitive player in the credit card market. Most Amex earn rates will still be better than other Australian credit cards. Earning Amex points also gives you the flexibility to transfer the points to multiple frequent flyer programs, as they are needed.
That said, there is little doubt that these changes are bad news for most Amex cardholders in Australia.
Ample notice provided
The good news is that Amex has provided plenty of notice of the upcoming changes. You’ll still be able to transfer your Amex points to airlines and hotel programs at the current rates until 14 April 2019.
If you’re planning to transfer your points to Velocity Frequent Flyer, don’t forget about the current 15% bonus on Velocity transfers during November. The next bonus is likely to be offered in May 2019 – after the Amex devaluation takes effect. So, now could be the best time to transfer your Amex points to Velocity.
Join the discussion on the Australian Frequent Flyer forum: Reduced AMEX earn rates from April 2019