In July American Express made a major change that dropped the value of their reward points by about 23%. On July, 1 2017 American Express Travel shifted the rebates they were offering at AmEx travel for qualifying airline ticket purchases from 50% to 35%. This change effected not only future AmEx reward points but also points that had already be earned.
This decrease had a huge impact on people who collect American Express Reward Points and redeem them on AmEx’s proprietary travel site, which I will call AmEx Travel. In the rebate program, card holders who had identified a designated airline got a 50% rebate on points they used to purchase tickets on their designated airline at AmEx Travel. This 50% rebate also extended to all Business and First Class ticket with any airlines purchased on AmEx Travel. Charlene and I usually fly economy so we use this rebate program primarily with American Airlines, which is our designated airlines.
Prior to July if we found a qualifying flight for $900 we would pay for that flight with 90,000 AmEx points at AmEx travel and then get a 50% point rebate for that purchase. That 45,000 point rebate would then be returned to our reward account. The rebate takes about a month to show up on your reward account. This 50% rebate made the net cost of the $900 American Airlines ticket only 45,000 AmEx reward points ( 90,000 – the 50% rebate = 45,000). Which meant that using the AmEx travel site I could get a clear return of 2 cents for AmEx point ( $900 / 45000 AmEx points = 2 cents per point). That’s a very good point value.
Here is how the change impacts that point value. After the July 1, 2017 adjustment, instead of a 50% rebate you now get a 35% rebate on your preferred airline purchases or your business or first class ticket when you buy the ticket at AmEx Travel. That means a $900 rebate qualified ticket will now get a rebate of 31,500 points ( $900 X .35 = 31,500) for a total point cost of 58,500 points (90,000 – 31,500 rebate = 58,500) for the same $900 dollar preferred airlines ticket. This unilateral change by AmEx dropped the value of every AmEx point from 2 cents to 1.538 cents.
In the real world that can have a huge impact. If you had 100,000 AmEx points your travel asset as of July 1, 2017 dropped from an asset worth $2000 to an asset worth $1538 dollars. In the stroke of a pen AmEx in reality devalued all their reward points by about 23%.
For Geezers like Charlene and I that are trying to stretch our travel assets as far as we can this is bad news, but life goes on.
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