This past year, American Express has been beat up by Chase. Badly. One of their answers was with the American Express Business Platinum Card and its 50% rebate on points used for paid fares in economy class on your selected airline, or business/first class fares on any airline. It meant that Amex Membership Rewards points could be valued very close to 2 cents per point, which is fantastic for a bank-style point program. If you booked a $500 fare on your selected airline, you’d pay 50,000 points and receive a 25,000-point rebate – while you needed the 50,000 points up-front, your net out-of-pocket would be 25,000 points. Plus, the rebates posted rather quickly (usually within a week for me).
If this sounds like it’s too good to be true … well, I guess it was. According to TPG, effective June 1, the Business Platinum ‘Pay With Points’ rebate will be reduced to 35%. This effectively makes Membership Rewards points worth ~1.54 cents when used for this feature. That’s a ~23% reduction in value.
In addition, there is now a 500,000-point cap on rebated points, which means that “only” the first 1.428 million points you redeem with this feature will get the rebate.
Lastly, rebates will now take 6-8 weeks to post rather than the quick < 1 week they’ve been in practice. Though this was announced earlier this week, it’s unfortunate that there are so many devaluations to this perk coming so quickly.
It’s good to note that for existing cardmembers who opened between October 2016 and May 2017, you’ll have the 50% rebate with no cap until the end of your membership year, but you’ll still have to wait 6-8 weeks for the rebate to post. I’m debating if I want to keep earning Membership Rewards points until my perk changes sometime in late November.
Considering that the changes go into effect on June 1st, this should mean that anyone who applies for the card and is approved by May 31st should enjoy the 50% rebate, though don’t get too used to it.
Once Again, Chase Beats Amex on Everyday Spend
Right now, I’m rocking the combination of the Chase Freedom (for 5x categories), the Chase Freedom Unlimited (for 1.5x Ultimate Rewards points everywhere), the Chase Ink Cash (for 5x at office supply stores up to $25K per year), and the Chase Sapphire Reserve (points are worth 1.5 cents toward travel). Note that the total annual fee I pay here is $450 for the Sapphire Reserve, though I get $300 off toward all kinds of travel, so I effectively pay about $150 per year. All the other cards have no annual fee.
A similar combination with American Express would be the Everyday Preferred card (1 MR per point on everyday spending, plus 2x at gas stations, plus 3x at grocery stores up to a $6,000 yearly limit, with a 50% bonus for 30 purchases in one month) and the Business Platinum Card with the now 35% rebate. Note that the annual fees here amount to $95 for the Everyday Preferred as well as $450 for the Business Platinum card, although I get $200 back toward one particular airline that I select. Even though the annual fee credit is a lot more restrictive, I’ll give Amex the full value and call this a $345 total annual fee ($450 – $200 + $95). Already, this combination is about $195 more expensive.
With Chase, I can earn 1.5x on everyday spend with the Freedom Unlimited, and use them for 1.5 cents each through my Sapphire Reserve, giving me 2.25% back toward travel. With Amex, I can earn 1.5x on everyday spend with the Everyday Preferred (so long as I have 30 transactions in that month), and use them through the Business Platinum card with the 35% rebate.
Let’s say I can put $20,000 of everyday spending on a card. For simplicity sake, I will say we put them on the Chase Freedom Unlimited, which nets us 30,000 Ultimate Rewards points, vs. the Everyday Preferred with the 50% bonus which nets us 30,000 Membership Rewards points.*
*You could also get 1.5x MR points with the Business Platinum but only on transactions of $5,000+.
Those 30,000 Ultimate Rewards points, when used through the Sapphire Reserve, will earn me a $450 ticket on any airline.
If I have 30,000 Membership Rewards points, I can purchase a $300 ticket in coach on my selected airline, or in business/first on any airline. I will then get a 10,500-point rebate in about 2 months with the new 35% rebate. Those 10,500 points can then be used for up to $105 towards the same type of ticket, and I’ll get a 3,675 point rebate 2 months later. This can repeat several times.
After 4 redemptions (as well as 4 rebates, for which I will have waited anywhere from 24 to 32 weeks minimum), those 30,000 Membership Rewards points will earn me a total of $459.12 in airfare.
Is that hassle worth the extra $9? Not to mention the increased annual fee? Or the reduced vendors which take American Express vs. Visa? Or even the better transfer partners that Ultimate Rewards has versus Membership Rewards?
I don’t think so. Amex took the one thing that gave them an advantage over Chase and absolutely tore it to pieces.
Chase was already eating American Express’ lunch. With this change, Amex just served them dessert.
