Confused about AMEX's credit card changes? Here's how they affect you

Confused about AMEX's credit card changes? Here's how they affect you

With American Express planning significant changes to the earning and redeeming of credit card frequent flyer points from next year, almost every AMEX cardholder in Australia will be affected: but many people are confused about what this means for them.

Read: American Express overhauls credit card frequent flyer points

Australian Business Traveller puts AMEX’s changes under the microscope to see how they’ll directly affect cardholders across a range of spending volumes and card types, including one very popular multi-card strategy, to explore the full impact.

(If you haven’t yet read our initial coverage, we'd suggest doing so first to gain a broad overview of what’s happening, before returning here to dive into the detail.)

1. The impacts for AMEX Platinum Charge Card customers

As reported earlier, the Platinum Charge Card will do away with the current structure that provides more points on dining and travel and fewer points on insurance and utilities, in favour of an increased ‘everyday’ earn rate across the board, equal to 1.125 frequent flyer points per $1 spent.

To see how that compares to today’s system, here’s firstly what a customer spending $150,000/year on the card would earn right now, if the spend were split as 3% at restaurants, 10% on travel or when overseas, 2% for government payments, $12,000 on insurance and utilities, and the remainder on everything else:

Spend category Spend volume Frequent flyer earn rate (today) Frequent flyer points earned
Restaurants $4,500 3/$1 13,500 points
Travel and overseas $15,000 2/$1 30,000 points
Utilities and insurance $12,000 0.5/$1 6,000 points
Government charges $3,000 0.5/$1 1,500 points
Everything else $115,500 1/$1 115,500 points
TOTAL: $150,000 Average of 1.11/$1 166,500 points

Compare that to next year, where points earning goes up on insurance, utility and ‘everyday’ transactions, but drops on lifestyle and leisure spend, and the end result is much the same, based on this particular spending pattern:

Spend category Spend volume Frequent flyer earn rate (new) Frequent flyer points earned
Restaurants $4,500 1.125/$1 5,062 points
Travel and overseas $15,000 1.125/$1 16,875 points
Utilities and insurance $12,000 1.125/$1 13,500 points
Government charges $3,000 0.5/$1 1,500 points
Everything else $115,500 1.125/$1 129,937 points
TOTAL: $150,000 Average of 1.112/$1 166,874 points

Of course, cardholders who spend more heavily on dining, flights, hotels and overseas transactions will see a bigger impact of these changes when those higher earning rates are removed.

On the flipside, those with bigger insurance and utility bills may be better-rewarded, given the increase to those earning rates – ditto cardholders who primarily spend in the ‘everything else’ category.

As everybody’s spending habits are different, we’d encourage you to make your own calculations in the same way as above, to see where you stand.

2. Cardholders with the Platinum Charge Card + Explorer Card

With the Platinum Charge Card being great for perks, and the AMEX Explorer credit card being great for points on everyday purchases, many savvy spenders choose to have both.

This smart strategy relies on using the Charge Card for dining, airfares, accommodation, overseas and government spend, and the Explorer card for insurance, utility and all over ‘everyday’ transactions, to earn points at the highest possible rate on every purchase.

To illustrate the example, here’s what that same $150,000/year spend would look like for a cardholder maximising their points today, by using the Platinum Charge Card and the Explorer card in tandem:

Spend category Card used Spend volume Frequent flyer earn rate (today) Frequent flyer points earned
Restaurants Platinum $4,500 3/$1 13,500 points
Travel and overseas Platinum $15,000 2/$1 30,000 points
Utilities and insurance Explorer $12,000 1.5/$1 18,000 points
Government charges Platinum $3,000 0.5/$1 1,500 points
Everything else Explorer $115,500 1.5/$1 173,250 points
TOTAL:   $150,000 Average of 1.575/$1 236,250 points

(Note: the frequent flyer earning rates on the Explorer card used above assume this card remains attached to the Membership Rewards Gateway program, as designed.)

Compared to using the Charge Card alone, whipping out the Explorer card for everyday purchases delivers almost 70,000 extra frequent flyer points every year – more enough for an extra business class flight to Asia – while bonus points are still gained on dining, travel and when overseas using the Platinum card.

But fast-forward to next year and this strategy would no longer make sense, as everyday transactions made on the Explorer card drop from earning 1.5 to 1.0 frequent flyer points per $1 spent, while at the same time, the Charge Card increases its earning rate to 1.125/$1, making it the more logical card of the two to use for every purchase.

Spend category Card used Spend volume Frequent flyer earn rate (new) Frequent flyer points earned
Restaurants Platinum $4,500 1.125/$1 5,062 points
Travel and overseas Platinum $15,000 1.125/$1 16,875 points
Utilities and insurance Platinum $12,000 1.125/$1 13,500 points
Government charges Platinum $3,000 0.5/$1 1,500 points
Everything else Platinum $115,500 1.125/$1 129,937 points
TOTAL:   $150,000 Average of 1.112/$1 166,874 points

While you won't be earning more points than before on your overall spends – in fact, a reduction of 69,376 frequent flyer points per year compared to the current Charge + Explorer combo – using the Platinum Charge Card for every purchase delivers a better result under the new system than alternating between Charge and Explorer.

3. Spenders who always use the AMEX Explorer card

Currently with an uncapped earning rate equal to 1.5 frequent flyer points per $1 spent into a range of programs including Virgin Australia Velocity, Singapore Airlines KrisFlyer and others, the AMEX Explorer card is a common go-to on its own, particularly as its $395 annual fee is offset by a $400 Travel Credit.

But from April, that great earning rate drops down to 1.0 frequent flyer points per $1 spent: a 33% decline.

As this card has no points cap and one simple earning rate for everyday purchases (with an exception only for government charges), here’s how frequent flyer earnings will be affected based on yearly spend on everyday purchases:

Spend (p.a.) Frequent flyer points earned (today) Frequent flyer points earned (15/4-) Loss per year
$25,000 37,500 25,000 12,500 points
$50,000 75,000 50,000 25,000 points
$75,000 112,500 75,000 37,500 points
$100,000 150,000 100,000 50,000 points
$150,000 225,000 150,000 75,000 points
$200,000 300,000 200,000 100,000 points

 While the Explorer card’s headline earning rate remains the same at 2 Membership Rewards Gateway points per dollar spent, the value of those points changes when the frequent flyer conversion rates swap from 4:3 to 2:1, causing the impacts above, as outlined in our earlier coverage.

As with any points earning rate based around dollars spent, those who spend the most stand to lose the most, while those who spend the least are least-affected.

4. Changes for Qantas AMEX Ultimate Card customers

While the changes for cards attached to the Membership Rewards program are quite complex, for American Express cardholders with a Qantas-branded credit card, the concept is much simpler.

All that’s happening here is a reduction in the earn rate of 0.25 Qantas Points per $1 spent on everyday purchases, and on payments made directly to Qantas, such as for flight bookings or Qantas Club membership.

To show the impact across a variety of spending volumes, here’s the impact for a cardholder who spends 5% of their dollars directly with Qantas, 3% on government charges, and the remaining 92% on everything else:

Spend (p.a.) Qantas Points earned (today) Qantas Points earned (15/4-) Loss per year
$25,000 38,000 31,938 6,062 Qantas Points
$50,000 76,000 63,875 12,125 Qantas Points
$75,000 114,000 95,813 18,187 Qantas Points
$100,000 152,000 127,750 24,250 Qantas Points
$150,000 228,000 191,625 36,375 Qantas Points
$200,000 304,000 255,500 48,500 Qantas Points

The changes to this card are less impactful than for Explorer cardholders, because the everyday earning rate is only decreasing by 0.25 frequent flyer points per $1 spent, compared to the more significant reduction of 0.5 frequent flyer points per dollar spent on the Explorer card.

5. AMEX Velocity Platinum Card changes

As with the Qantas AMEX Ultimate Card, the AMEX Velocity Platinum Card sees its earning rates cut by a quarter of a frequent flyer point for every dollar spent on everyday charges – from 1.5 to 1.25 Velocity points per $1 – and on flight bookings with Virgin Australia (2.5 to 2.25 per $1 spent).

Accordingly, the effect this has on Velocity frequent flyer earning rates mirrors what’s happening on the Qantas card.

Here’s again what that looks like for cardholders who spend 5% of their money on Virgin Australia flights, 3% on government charges, and 92% on everything else:

Spend (p.a.) Velocity points earned (today) Velocity points earned (15/4-) Loss per year
$25,000 38,000 31,938 6,062 Velocity points
$50,000 76,000 63,875 12,125 Velocity points
$75,000 114,000 95,813 18,187 Velocity points
$100,000 152,000 127,750 24,250 Velocity points
$150,000 228,000 191,625 36,375 Velocity points
$200,000 304,000 255,500 48,500 Velocity points

For full coverage, read: American Express overhauls credit card frequent flyer points

Chris Chamberlin
Chris Chamberlin is a senior journalist with Australian Business Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!
 

27 comments

  • cssaus

    cssaus

    19 Nov, 2018 07:50 am

    Can you please clarify what exactly does "Government Charges" encompass. Do they include payments to the ATO?

    Steve
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    19 Nov, 2018 10:17 am

    This has been around for years on AMEX cards, so isn't something changing under this revamp, but AMEX describes 'government' as "including the Australian Taxation Office, the Australian Postal Corporation (Australia Post), federal/state and local government bodies."

    Member who gave thanks

    cssaus

  • Hornet

    Hornet

    19 Nov, 2018 08:15 am

    Chris, what are the changes for Centurion cards?
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    19 Nov, 2018 10:20 am

    Hi Hornet, we generally don't cover Centurion as AMEX doesn't talk about it with media, however, if you read our previous article and a couple of the comments underneath, you'll find information relevant to Centurion: and also in the letter you'll receive for AMEX, which may (or may not) have some pleasing news regarding your existing points balance, so I've heard...
    No member give thanks

  • Differs

    Differs

    19 Nov, 2018 09:21 am

    I think the key point is not the earn rate changes, but the halving of value when converting Amex points to airline points.
    Members who gave thanks

    cssaus, Bafe

  • Chris Chamberlin

    ChrisCh

    19 Nov, 2018 10:31 am

    Hi Differs, for the Membership Rewards cards, the frequent flyer earning rates indicated in this article (both the existing rates, and the new rates from next year) take these conversion changes into account, as we've used the 'net' frequent flyer earn rates per dollar spent, considering the old vs. new earn and burn structure.

    As we'd flagged the impact of AMEX's conversion rate changes in our previous article (which, for some members, could cut the value of those points by up to 50%), we didn't include this again, as a change in conversion rate impacts existing points balances the most, rather than points earned under the new structure which were designed with the new conversion rates in mind.
    Member who gave thanks

    Differs

  • lvtravel01

    lvtravel01

    19 Nov, 2018 10:05 am

    awesome article - comparison with clarity. Thanks Chris.
    Bummer missed the plat. charge+explore combo. Though Qantas is not included to explorer.
    If amex existing points is not halved, i d feel better. No grandfathering consideration is a poor reflection to amex.
    Member who gave thanks

    sillytraveller

  • Chris Chamberlin

    ChrisCh

    19 Nov, 2018 10:24 am

    I've heard that some particularly 'high value' customers may have their points balances doubled come April if those points aren't already converted (so that they maintain their value after the conversion rates change), but I've only heard this from a small number of Centurion cardholders who were advised this would apply to them via their Relationship Managers (so a personal offer, rather than a blanket rule), as beyond that, AMEX confirmed during the briefing that as the general rule, existing points balances wouldn't be doubled.
    No member give thanks

  • Scott Rawlings

    sra35

    19 Nov, 2018 02:20 pm

    I've been on the Amex website and used their chat function. They tell me that letters have been produced last week to be sent to all members advising them of the changes. Turns out with my program I'll be eligible for 1.5 points per dollar spent (up from 1) and 1 for government spends (up from 0.5 however I don't have government spends) so I'll actually only be 0.5 point per dollar behind when transferring to airlines partners than where I stand today. Not nearly as bad as I originally expected.

    No member give thanks

  • Scott Rawlings

    sra35

    19 Nov, 2018 02:22 pm

    I will need to transfer my current one million plus points balance in April to an airline partner so I don't get hit with a loss there
    No member give thanks

  • Greg84

    Greg84

    20 Nov, 2018 07:51 pm

    Qantas doing a good bonus at present -ay want to look at it now as it expires 30 Nov I believe
    No member give thanks

  • Adam T

    AT

    19 Nov, 2018 03:03 pm

    Chris hi and thanks for this, this has been a great help in seeing options. As Platinum Charge I was initially very annoyed like most but it’s interesting seeing everyday, utilities and Govt spend rates increasing how it impacts.
    I think I read somewhere that Platinum Reserve Credit (free to Plat Charge holders) rates are dropping below Plat Charge so I’m struggling to see why I will continue using it? I typically use Reserve for personal spend and put business on Charge but now I’m inclined to get x2 Charge cards to divide spend.
    Member who gave thanks

    cssaus

  • cssaus

    cssaus

    19 Nov, 2018 03:15 pm

    AT, I tend to agree with you but I remembered that even though the Plat Reserve card is free, you get a $400 travel credit with it. So even though I may not use it after the change I will still keep it just for the travel credit.

    Member who gave thanks

    AT

  • Adam T

    AT

    19 Nov, 2018 07:18 pm

    Hey Cssaus thanks for this. Yes you’re quite right, travel credit is good point. I’m going back to Re-read all the information again .....slowly this time!
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    19 Nov, 2018 03:32 pm

    Hi AT, just to clarify, there's no change to the earn rate on government payments in terms of actual frequent flyer points per dollar spent (today, the Platinum Charge provides 0.5 MR points which are worth 0.5 frequent flyer points, and from April, the card will provide 1 MR point which will still be worth 0.5 frequent flyer points): it's the insurance, utility and 'everyday' earning rates that are instead increasing on the Plat Charge.

    Have a read of our previous article which outlined these changes for the Platinum Charge Card, and also the Platinum Reserve.

    The advantage of having the Reserve, if nothing else, is that it'll continue to provide its own $400 Travel Credit every year and is available to Platinum Charge Card holders at no additional annual fee, giving a total of $850 in Travel Credits every year in return for the same $1,450 Platinum Charge Card annual fee ($450 from the Plat Charge, plus $400 on the Reserve, which costs nothing extra to have).

    To your other comment, you could call AMEX and request an "account card" or "A/C card" on your Platinum Charge Card account - which essentially makes you an 'additional cardholder' on your own account with a second card and unique card number. More detail in this article at point #5.
    Members who gave thanks

    cssaus, AT

  • Adam T

    AT

    19 Nov, 2018 07:16 pm

    Chris hi and thanks for your reply, very detailed. Yes I glanced over the Govt charges so my mistake. And the travel credit on Reserve card is good point.
    I’ll go back and Re-read all the articles and updates again...slowly this time.
    No member give thanks

  • opusman

    opusman

    21 Nov, 2018 03:21 pm

    Not sure your table is right for the Platinum charge, at least.

    Earn rate is 1.125 "Membership Rewards" points per $. That's the Amex points currency, they're not frequent flyer points.

    The conversion rate into, say, Qantas FF points changes from 1:1 to 2:1. So it will take 2.25 Membership Rewards point to earn 1 Qantas FF point.

    So $150,000 will earn you 168,750 MR points, but only 84,735 Qantas FF points.
    No member give thanks

  • opusman

    opusman

    21 Nov, 2018 03:26 pm

    (when I say it's "not right" what I actually mean is, it's misleading the way it talks about Frequent Flyer points earned)
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    21 Nov, 2018 03:46 pm

    Hi opusman, the table is correct. The earn rate on the Platinum Charge Card will become 2.25 Membership Rewards points per $1 spent on everyday purchases next year (not 1.125 Membership Rewards points per $1, as your comment suggests): see our original story for the full details.

    With the 2:1 conversion rate from next year, that will provide the equivalent of 1.125 frequent flyer points per $1 spent on everyday purchases, which is what we've shown in the tables.

    Most cardholders use these cards as a way of earning actual frequent flyer points on their everyday purchases, but the way it works from one credit card to the next can be very opaque, given that different card issuers can apply different earning and different conversion rates, which can be very confusing when trying to compare one card or card issuer to another to ascertain the real 'value' behind each point, because the number of frequent flyer points earned per $1 spent can be unclear.

    (For example, you could have a card that provided one million 'bank points' per dollar spent, but if the frequent flyer conversion rate is 1,000,000:1, at the end of the day, you're earning one frequent flyer point per $1 spent, regardless of how the bank dresses it up, and that last piece of information is what's most important.)

    That's why in this article (and elsewhere on the site), we use transparency to highlight how many actual frequent flyer points a card would earn per $1 spent, regardless of the mechanism through which those points are accrued.
    No member give thanks

  • Julie M

    austrav

    21 Nov, 2018 04:27 pm

    Hi Chris,I have an Amex Explorer and a Velocity Platinum Visa card. I use the rewards from both for SIA first and business tickets. As far as I can see, the only reason to keep the Amex card after April 15 will be if I need to exceed an A$8,000 per month spend. Do you agree? Could I do better?
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    21 Nov, 2018 05:02 pm

    Hi austrav, we can't provide readers with what Australian laws consider to be 'personal financial advice', so can't advise you as to which credit cards would be best for your own situation.

    However, we can direct you to our previous article on the AMEX changes, which mentioned that the earning rate for the AMEX Velocity Platinum Card would be 1.25 Velocity points per $1 spent on everyday purchases after the changes come into place (currently 1.5/$1), while the earn rate on the Explorer card would be equal to only 1.0 frequent flyer point per $1 spent, making the AMEX Velocity Platinum Card 25% more rewarding from next year when compared to Explorer.

    No member give thanks

  • PG44

    PG44

    21 Nov, 2018 05:01 pm

    Hi Chris, following these changes, does ABT still consider Explorer to be the best card going around for those who want flexible Singapore/Cathay points?
    Or are there better alternatives now?
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    21 Nov, 2018 05:06 pm

    Hi PG44, this is something we can look to cover in future editorial after further research that also takes into account all other recent changes in the credit card market, but until that time, would direct you to our previous article which covered that the AMEX Platinum Charge Card would deliver a higher number of KrisFlyer miles per dollar spent than Explorer (1.125/$1 versus 1/$1) from next year.
    No member give thanks

  • Keven Diggens

    Akilo

    8 Dec, 2018 02:32 pm

    Hi Chris,
    I think some of the above confusion might be due to terminology. In my mind I earn credit card points and convert them into airline miles. Maybe your use of "frequent flyer points" as the airline rate instead of "FF miles" may be confusing some?
    Cheers
    Akilo
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    8 Dec, 2018 07:28 pm

    Hi Akilo, the term “frequent flyer points” is the most common in Australia and we’re sure more readers would understand those words and the meaning behind them, more so than shorthand terms like “FF” or terms like “miles” when both Qantas and Velocity use “points” (‘miles’ is much more common overseas). These articles are carefully compiled and the digits triple-checked before publication, so we’re happy with how they’ve been presented.

    As we’ve said earlier, the number of ‘credit card points’ awarded per dollar spent is largely irrelevant: what matters most is what those points are worth as ‘frequent flyer points’, so where possible, we keep things simple for readers by doing the maths.
    No member give thanks

  • Brett Segal

    NQflyer

    11 Dec, 2018 12:38 pm

    Is there any change for the Amex-issued Westpac Altitude Black Card?
    No member give thanks

  • Chris Chamberlin

    ChrisCh

    11 Dec, 2018 01:15 pm

    The points earned on these cards are controlled by Westpac. Westpac made its own changes back in November.
    No member give thanks

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24 May, 2019 03:25 pm

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