American Express is set to make sweeping changes to earning rates across its entire card portfolio, with some transactions earning more points but most cards accruing fewer frequent flyer points per dollar spent than they do today.
Across the board, AMEX’s line-up of Qantas Points-earning credit cards will see a reduction of 0.25 Qantas Points per $1 spent on everyday purchases once the new rates take effect on April 15 2019.
While these cards will continue to offer one extra Qantas Point per $1 spent on purchases directly with Qantas – such as booking Qantas flights or paying for lounge membership – those payments themselves will also receive fewer points, due to that decline in the base earning rate.
The card company's own Membership Rewards Ascent Premium, Ascent and Gateway programs will adopt a flat 2:1 conversion rate for points sent across to airline frequent flyer programs, impacting a range of popular cards including AMEX’s Explorer, Platinum Edge, Platinum Charge and Centurion Cards.
American Express claims the cuts stem from a reduction in the fees charged to businesses for processing AMEX payments, which in turn have allowed AMEX to increase the number of companies that accept American Express cards so that cardholders can earn points in more places.
Will Thorne, AMEX Australia's Head of Airline Co-Brand Partnerships and Loyalty, shared with Australian Business Traveller at a briefing in Sydney that these reduced merchant rates have allowed it to sign up over 120,000 new Australian businesses since January 2017, ranging from corner cafes to mass-market retailers such as H&M.
"To ensure we're able to compete effectively, we've had to close the gap between our price and the merchant fees of competitors. This has accelerated our merchant acceptance growth and helped increase the number of merchants warmly welcoming our Card Members."
AMEX's revamped strategy follows the same basic principle as seen with the RBA’s mid-2017 cuts to credit card interchange fees which slashed the revenue banks collected from every credit card transaction, with the knock-on effect of reducing the amount of money banks could spend on rewards like frequent flyer points.
Here’s how the AMEX cardscape will shift from April 15 2019.
Changes to Qantas Frequent Flyer American Express cards
For cardholders with Qantas-earning AMEX cards, here's how today's earning rates compare with what you'll get from next year.
[If you're reading this article on a smartphone, you might find it easier to turn your phone to 'landscape' mode to peruse the full tables.]
||Qantas spend (today)
||Qantas spend (from 15/4/19)
||All other purchases (today)
||All other purchases (from 15/4/19)
|Qantas AMEX Ultimate Card
|Qantas AMEX Premium Card
|Qantas AMEX Discovery Card
There are no changes to the American Express Qantas Business Rewards Card, which continues to provide 1.25 Qantas Points per $1 spent on most everyday purchases through the Qantas Business Rewards scheme.
Changes to Virgin Australia Velocity Frequent Flyer AMEX cards
In a similar style to AMEX’s Qantas-branded cards, direct Velocity-earning American Express cards will also have their ‘everyday’ earning rate lowered by 0.25 Velocity points per $1 spent, affecting both regular purchases and charges direct with Virgin Australia.
The changes look like this, again for purchases made from April 15 2019:
||Virgin Australia spend (today)
||Virgin Australia spend (from 15/4/19)
||All other purchases (today)
||All other purchases (from 15/4/19)
|AMEX Velocity Platinum Card
|AMEX Velocity Escape Card
Changes to American Express Membership Rewards
Cardholders enrolled in the Membership Rewards Ascent Premium, Ascent and Gateway programs will face new frequent flyer conversion rates from April 15 2019, affecting a range of popular cards including AMEX’s Explorer, Platinum Edge, Platinum Charge and Centurion Cards.
Simply put, all conversion rates from Membership Rewards to airline frequent flyer programs will transition to a 2:1 ratio across the board, so whether you’re enrolled in Ascent Premium, Ascent or Gateway, converting your points from April 15 2019 will occur at a 2:1 rate.
For Ascent Premium members – such as Platinum Charge Card and Centurion cardholders – and Ascent members converting to most partners, that represents a 50% reduction in value, given these schemes currently offer conversions at a 1:1 rate.
The change is a little less significant for Gateway members – such as AMEX Explorer cardholders – who can currently convert points at a 4:3 rate, but still stands as a 33% drop in value.
Notably, there are no changes for David Jones Membership Rewards members, as airline conversions from this flavour of Membership Rewards already take place at a 2:1 rate, nor are there any changes to earning rates on David Jones cards.
Also, Ascent Premium members will continue to be able to convert their points directly to Qantas Frequent Flyer – an option not available to Ascent or Gateway members – while points transfers to Virgin Atlantic Flying Club will continue to be unavailable to Gateway users.
Obviously, given the new conversion rates above take effect from mid-April 2019, points conversions made before this date will continue to be processed at the current, more generous rates.
As such, if you’re sitting on a mountain of Membership Rewards points, the best strategy would be to convert these into airline frequent flyer points in your preferred program before that date, so that they retain their current value.
(As an added bonus, points transfers from Membership Rewards to Velocity Frequent Flyer attract a 15% bonus throughout November 2018, so transferring your existing bounty this month not only escapes next year's devaluation but also gets you more points than you'd otherwise receive.)
Finally, transferring points to Marriott Rewards / Starwood Preferred Guest will continue to take place at a 3:2 rate, as was revised earlier this year as part of the Starwood and Marriott merger, although transfers to Hilton Honors will switch from 1:1 to 2:1, a drop of 50% in value.
For clarity, here's how those new conversion rates sit across the board:
||Ascent Premium (today)
||Ascent Premium (from 15/4/19)
||Ascent (from 15/4/19)
||Gateway (from 15/4/19)
|Cathay Pacific Asia Miles
|Singapore Airlines KrisFlyer
|Malaysia Airlines Enrich
|Thai Royal Orchid Plus
|Virgin Atlantic Flying Club
New earning rates on AMEX Membership Rewards cards
Paired with the revised redemption rates from all tiers of Membership Rewards, the credit cards and charge cards attached to this program will also begin earning points at new rates from April 15 2019, as follows.
American Express Platinum Charge Card
Currently, AMEX’s top-of-the-line metal card provides the equivalent of 3 frequent flyer points per $1 spent at restaurants and cafes, and 2 frequent flyer points per $1 spent on travel-related charges like hotel, airline and overseas spend.
It also gives just 0.5 frequent flyer points per $1 spent on things like utility, insurance and government payments, and 1 frequent flyer point per $1 spent everywhere else.
From April, those higher earn rates for lifestyle and leisure spend will be removed, in favour of an improved ‘everyday’ earning rate across the board, equal to 1.125 frequent flyer points per $1 spent: a 12.5% improvement compared to today on regular charges.
(You’ll earn 2.25 Membership Rewards points per $1 spent, equal to 1.125 frequent flyer points per $1 spent in your airline program of choice, following a 2:1 conversion.)
Additionally, payments to utility providers and insurance companies will no longer earn points at a reduced rate (currently 0.5/$1), so will more than double to provide 1.125 frequent flyer points per $1 spent.
Government spend remains at 0.5 frequent flyer points per $1 spent: to be provided as 1 Membership Rewards point, worth 0.5 airline miles following conversion.
Finally, the current $300,000/year tiering threshold – at which the card’s dining and travel bonus categories switch off until the next year – will be removed, so all transactions will earn points at the same rate regardless of how much you’ve spent every year.
Similar changes will apply to the Platinum Business Card, which does away with its bonus points rates on categories like dining and advertising in favour of the same 1.125 frequent flyer points per $1 spent earn rate as for the personal charge card, and an increase in points earned from utility and insurance payments.
American Express Explorer, AMEX Platinum Reserve credit cards
Positioned at more advanced frequent flyers, the popular AMEX Explorer credit card is arguably the hardest-hit, as is the Business Explorer card, with their ‘everyday’ earn rates slashed from 1.5 to 1.0 airline frequent flyer points per $1 spent.
The cards will still earn 2 Membership Rewards points per $1 spent as of April, but the drop in value here is due to the change in the Membership Rewards Gateway conversion rate, which worsens from 4:3 to 2:1, without a higher earning rate being introduced to compensate.
Payments to government bodies will become slightly more rewarding, set to earn 1 MR point per $1 spent, equal to 0.5 frequent flyer points, as opposed to 0.5 MR Gateway points today, worth 0.375 frequent flyer points.
Additionally, the AMEX Platinum Reserve credit card – a free companion to the AMEX Platinum Charge Card – will also no longer earn points at the same rate as the charge card: its earn rate will instead mirror the Explorer card, at 2 MR points per $1 spent, worth 1 frequent flyer point, with government spend continuing to give 0.5 frequent flyer points.
Realistically, this now pegs the earning rates for both the Explorer and Platinum Reserve cards as being no better than some top-of the-line Visa credit cards, in terms of everyday spend.
For example, Virgin Money's Velocity High Flyer Visa card provides 1 Velocity point per $1 spent up to $8,000 per month (0.5/$1 thereafter), and ANZ's Rewards Black Visa card gives the equivalent of 1 Velocity point per $1 spent up to $5,000 per month (0.5/$1 beyond).
While the AMEX Explorer and Platinum Reserve cards have no monthly (or yearly) tiering threshold, awarding points at the full rate regardless of how much is spent, for the majority of cardholders, these Visa options could be just as rewarding and with the broader acceptance of Visa.
American Express Platinum Edge credit card
A favourite with those who spend big at supermarkets and petrol stations, the American Express Platinum Edge credit card will undergo its own transformation, but continue to offer a higher earning rate on these purchases than regular transactions.
Payments at major supermarkets like Woolworths and Coles will still earn 3 Membership Rewards points per dollar spent from April, although with the program’s new 2:1 conversion rate in play, the ‘value’ of those points drops from 3 to 1.5 airline frequent flyer points per $1 spent.
Purchases at petrol stations currently provide 2 Membership Rewards points per $1 spent, equal to 2 frequent flyer points. As of April, the headline rate will climb to 3 MR points per $1 spent on these payments, but be worth a reduced 1.5 frequent flyer points per $1 spent after conversion.
Additionally, international transactions will begin earning 2 Membership Rewards points (still one frequent flyer point) per $1 spent, so those payments are safe from a ‘value cut’, although all other transactions will receive just 1 MR point per $1 spent, worth 0.5 frequent flyer points: half as many as today.
American Express Essential credit card
This no-annual-fee card currently delivers 1 Membership Rewards Gateway point per $1 spent on everyday purchases, equal to 0.75 frequent flyer points in programs like Velocity.
From April when the new Membership Rewards conversion rates take effect, the card’s earning rate will climb on paper from 1 to 1.25 MR points per $1 spent, although with the new 2:1 conversion, those points will be worth less, giving you 0.625 frequent flyer points per $1 spent, to be precise.
Government transactions, however, will become marginally more rewarding, climbing from 0.375 frequent flyer points per $1 spent (0.5 Gateway points with a 4:3 conversion) to 0.5 frequent flyer points per $1 spent (1 MR point with a 2:1 conversion).
Membership Rewards cards head-to-head
Given the complexity and significance of the changes being made across the entire Membership Rewards card base, here's how they'll alter how many actual airline frequent flyer points you can earn per $1 spent on your card, across a range of industries.
You can see how the earning rates on each particular card will change in each column:
|Card / Spend Type
||AMEX Platinum Charge Card
||AMEX Platinum Reserve
||AMEX Platinum Edge
|Flights, hotels (today)
|Flights, hotels (15/4-)
|Int'l spend (today)
|Int'l spend (15/4-)
|Petrol stations (today)
|Petrol stations (15/4-)
|Insurance, utilities (today)
|Insurance, utilities (15/4-)
|Gov't spend (today)
|Gov't spend (15/4-)
|All other spend (today)
|All other spend (15/4-)
For example, an AMEX Platinum Charge Card holder can currently earn the equivalent of three Virgin Australia Velocity points (or three KrisFlyer miles, etc.) per dollar spent on restaurant charges.
From April 15 2019, due to the change in both earn and conversion rates, the same spend would instead deliver 1.125 Velocity points, or 1.125 KrisFlyer miles, and so on.
On this card and all others, there are no changes to annual fees, international transaction fees or other card benefits like insurance, lounge access or Travel Credits, where provided: the changes being made are limited only to frequent flyer points and Membership Rewards points across AMEX’s range of credit cards and charge cards.
American Express will begin notifying affected cardholders of these changes from November 19 2018.
Chris Chamberlin travelled from Brisbane to Sydney to attend a briefing on the changes as a guest of American Express.