As I’ve mentioned in my post last week, things in this hobby are getting tougher each year. It’s especially true in the case of American Express and manufactured spending. If you are an old-timer, you already know what I’m talking about. If you are new to this hobby, you definitely want to pay attention to the information below.
Why you should care about American Express credit cards
Because Amex issues some of the most lucrative cards on the market, at least when it comes to everyday spending. And of course, their initial signup bonuses are nothing to sneeze at either.
Most of the time, newcomers are funneled into Chase “ecosystem” and for a good reason. Ultimate Rewards are simpler to use, you can combine them with your spouse, and you don’t have to keep track of various minuscule monthly credits.
Chase is definitely the top dog of the credit card world, and that’s where you want to start. However, Membership Rewards program has its strengths, and it would be a mistake to overlook it. Related post: Why I’ve fallen in love with Membership Rewards
In addition, Amex issues cards that are a great fit for an average family. Three main examples: Blue Cash Preferred, Amex Everyday Preferred and Amex Gold (for those who live in a metropolitan area and spend a lot on groceries). Incidentally, those are the cards that Amex team is watching very closely right now. Why? Grocery store bonus category.
This especially applies to Amex Gold because you earn 4 MR points per dollar on up to $25k worth of groceries each year.
Always check the terms of the offer before applying
It’s common knowledge that you don’t want to do anything fishy when meeting minimum spending requirements on Amex cards. That includes PayPal, prepaid money products and possibly even third-party gift cards. Here is an example of Amex Gold offer terms:
This has been the case for years, and I’ve stressed many times to readers that you should only do organic spending when it comes to initial signup offer. Amex has been known to claw back points/cashback months after the bonus was deposited into your account.
In the last year or so, they have added restrictions on everyday earning as well:
Can Amex really tell that you are buying gift cards?
Yes, they absolutely can. This is a common misconception because many folks think that if they buy gift cards inside of grocery store, their secret is safe. Nope. An eager Amex rep can get a detailed breakdown of the charges and see exactly what you’ve bought. Will they? That’s a million dollar question. As in, if you buy a million dollars worth of Visa gift cards in the grocery store, chances are, you will get caught.
I think that even purchasing one $500 Visa gift card per visit is extremely risky. I don’t recommend it if you value your relationship with Amex. This is especially true if you are collecting Membership Rewards points and don’t plan to transfer them anytime soon. While you can redeem cashback in $25 increments with cards like Blue Cash Preferred, it’s different if you are collecting MR points speculatively.
Also, Amex doesn’t mess around. I can’t go into any details, but believe me, I’m speaking from experience.
While Chase usually gives you 30 days to transfer points when they decide to sever their relationship with a customer, Amex simply removes them. Whether they choose to confiscate your stash or close the cards altogether, there is zero warning.
You log into your account and find out that poof, points are gone. Oh, but you can fight Amex, right? Maybe, maybe not. Amex has added terms saying they can remove your points for any reason.
Plus, if you are buying Visa gift cards in the grocery store, you are going against the written terms. Again, it’s just not worth it. Do you really want to spend the rest of your life fretting each morning while logging into your Amex online profile? People with millions of miles may be willing to take that chance, but not an average Joe saving points for that one big trip with his family.
What about buying small third-party gift cards from time to time?
It’s my firm belief that Amex is mostly targeting those who buy $500 Visa gift cards inside of grocery stores. I don’t think they will care if you purchase a $50 Amazon or Disney gift card on occasion. Obviously, I can’t guarantee anything, but it seems extremely unlikely that you would be targeted under those circumstances.
That being said, I wouldn’t risk it when meeting minimum spending requirements. Nothing may happen, but why take a chance? Again, I recommend only organic spending, period. Prepay your power or phone bill, make an extra daycare payment, and so on. You don’t want to give Amex an excuse to take your points away. So play by the rules, and sleep soundly at night. That said, if you’ve bought a few gift cards before learning about this restriction, I wouldn’t panic.
For those doing heavy volumes of MS in the last year, perhaps it’s prudent to transfer all the points out, just in case. Current 40% transfer bonus to Avios is a good option to consider.
As I’ve said in the beginning, most of the info in this post is pretty much common knowledge in the hobby. However, I think it’s important to put out a reminder now and again because some folks get lulled into thinking that clawbacks can’t happen to them. They sure can. Amex isn’t messing around these days, and it will probably only get worse as they try to mitigate losses related to their rewards arm.
Leana is the owner and founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.