American Express Membership Rewards Devalues

There were two big changes announced today that affect the American Express Membership Rewards program, and therefore all of us, negatively:

1. The Premier Rewards Gold Card will no longer earn a 15,000 point bonus on $30,000 annual spend starting in 2015.
2. Transfers into Delta SkyMiles will be capped at 250,000 per year per account starting in 2015.

 

 

Let’s take a look at the impact of each of these, because I believe each is significant.

 

No More 15K Bonus on Premier Rewards Gold Card

The Premier Rewards Gold card is one that usually only big spenders hold on to because of it’s $175 annual fee (which is usually waived the first year). The big benefits of the card were that it earns 3x on airfare, 2x on gas and groceries, and a 15,000 bonus points after $30,000 in annual spend. The two types of people that kept this card beyond the first year generally fit into the following categories:

• Those that purchased a lot of airfare, thus making the 3x benefit worth the annual fee. The 15K bonus was secondary but still a big benefit.
• Those that manufactured Membership Rewards points at grocery/gas stores for the 2x benefit. Usually they get to the $30,000 bonus and stop there, creating 75,000 points per year (2 x $30K spend + 15K bonus).

I talk about manufactured spending on a somewhat regular basis, so for those that use the PRG card for that purpose it’s easy to see it’s no longer worth keeping this card beyond this year. I’m not sure how American Express can justify the massive $175 annual fee of this card while removing this bonus benefit. The card doesn’t even waive foreign transaction fees!

For those that book a lot of airfare, you’ll have to really look at the numbers to decide. If you were getting to $30,000 a year on airfare alone then this card might still be worth keeping – after all, that’s 90K points and about 50% better than any other card would earn you on the same purchases.

This card is definitely not worth keeping for the average person, or even the average points person.

Transfers to Delta Now Capped at 250,000 Per Year

There’s a reason I rarely, if ever, write about the Delta SkyMiles program. I just don’t like it. They don’t let you book First Class awards with partners at all, they rarely have low-level award availability (and I think this might get worse after the recent devaluation), you can only redeem round trip flights (one-ways are coming in 2015 though), and in general their miles are much harder to use than those of other programs. And that’s just the basics. The only useful redemptions to me are on partners Virgin Australia and Virgin Atlantic, where there are low taxes/fees and decent-to-good availability.

Once again, however, Delta is indicating to me that I should continue to brush their program aside for most things. Starting January 1, 2015, you can transfer a maximum of 250,000 points into one particular Delta SkyMiles account. Until December 31, 2014, however, you can transfer 999,000 per day with no limit. I’d say that’s quite the reduction.

First I’ll point out that the limit applies not just to American Express Membership Rewards, but to all programs that can transfer into SkyMiles. For our purposes, that means SPG Starpoints as well. This change was made by Delta, not by Amex.

At first glance this may not seem like a huge deal – 250K is still a lot of miles. But for me and most others, the best value of this program are on partners Virgin Australia and Virgin Atlantic. A round trip Upper Class (Business Class) ticket on Virgin Atlantic costs 125K per person and a round trip to Australia on Virgin Australia costs 150,000 per person.

For the mathematically challenged, that means you can transfer just enough points to cover 2 tickets from the US to London, but only enough for one ticket to Australia. To me that’s a HUGE bummer.

Combine that with the fact that American Express now requires the names of the loyalty program account to match in order to transfer points into it, and many people will have a huge problem when they need to redeem for multiple award flights.

For example, let’s say John has 300K Membership Rewards points and wants to treat his wife Mary to an anniversary trip to Australia in Business Class. John can only transfer 250K MR points to SkyMiles, which is enough for just a single ticket to Australia. Even if he transferred 150K points into his SkyMiles account for the first ticket, there’s no way to move the other 150K MR points together for the other ticket. If John chose to transfer the new maximum of 250K into his SkyMiles account, he’ll need to find another way to get 50K SkyMiles to book that second ticket.

Poor John and Mary can’t take their trip. Why does Delta hate John and Mary so much?!

 

Summary

It’s a bummer when any program devalues, but when a transfer program like Membership Rewards devalues it stings a bit more. In short, I think American Express is less valuable in 2015 than it is for the rest of 2014. I would never say to speculatively transfer Membership Rewards points to Delta, but if you know you need to book two people on a long-haul international flight using Delta SkyMiles next year, it would be in your best interest to make that transfer before the end of 2014.

You can also surmise that this means the end of transfer bonuses from Amex to Delta. There hasn’t been one for a while (recall there actually used to be 50% bonuses), but it’s unlikely we’ll see one again. The Amex MR program is still useful for partners like Aeroplan and Singapore Airlines.