Amex upgrading Gold customers to Preferred Rewards Gold – a good deal?

Reader Kim got in touch to ask my advice on a letter she received from American Express.  She has a Gold card  – the old style one, no longer available to new customer.  This is different from the ‘Preferred Rewards Gold‘ which has been the card they have been pushing for the last couple of years.

Amex is forcibly upgrading all Gold card holders to Preferred Rewards Gold from 1 October.  Kim wanted to know if this was a good deal or not.  Frankly, I was not impressed.

Fundamentally, you should not be paying an on-going annual fee for a credit card unless the benefits are easily worth the fee.  And the Amex Preferred Rewards Gold does not deliver.  What are you getting?  OK, 2 Membership Rewards points per £1 on travel and foreign spend is good, but only 1 on most other purchases.  2 airport lounge passes is worth taking but hardly worth a fortune, especially as you can’t use them in Heathrow Terminal 5.  And the insurance offered is not a replacement for full travel insurance and seems very similar to what is offered by other credit cards.

Let’s compare the Preferred Rewards Gold to the BMI Amex.  If Kim cancels her Gold, she will save £125 a year on fees.  The BMI Amex has no fee, offers a 20,000 mile sign-up bonus (convertible to 20,000 Avios) and pays 1.5 miles per £1.  This is 50% more than the Preferred Rewards Gold on most spending, albeit less – but not much less – on travel and foreign spend.  The Preferred Rewards Gold card does offer a 7,500 point bonus if you spend £15,000 on it per year, but this is not an easy target.

Kim could also consider the £85 fee version of the BMI Amex.  This comes with an extra 4,000 miles for signing up, and earns 2 miles per £1 on all spending, instead of 1.5 miles per £1.  If you are spending £10,000+ a year on the card then this version may be better for you.

Assuming that Kim is using her Membership Rewards points for Avios, I would recommend cancelling – although she will need to empty out her Membership Rewards balance first.  If she is using her MR points to convert to a different partner which does not have its own UK credit card (eg Singapore Airlines) then it is a different question.

Despite the comments above, I DO strongly recommend the Amex Preferred Rewards Gold to new cardholders.  There is no fee for the first year, and you get 20,000 Membership Rewards points.  But Kim is in a totally different position, with no bonus and no fee waiver.

(To see our complete list of all current credit card bonuses, click here to visit our ‘Credit Cards Update’ page or use the link in the menu bar at the top of the page.)

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Comments

  1. Regarding the Preferred Rewards Gold card, not that it is not actually “2 Membership Rewards points per £1 on travel and foreign spend”.

    Rather it is 1 extra MR point on:
    – Travel
    – Foreign Spend
    – Supermarkets / Petrol (in the first year)

    And these stack!

    Hence, if you do spend a lot on foreign travel (i.e. hotels while abroad or foreign booked travel) or supermarkets/petrol abroad then you are effectivly getting 3 MR per £1.

    Which (if convered direct to Avios) is twice what you get on the free BMI card, possibly more as you can hold in Memebership Rewards points for any conversion bonus to come along (or to top up any other scheme).

    If you are willing to put a value of 1p on a MR point, then you are effectivly covering your 3% fee on the card, and the possiblity for true positive earning comes when a good conversion bonus appears. [If you have no immediate need.]

    Indeed, as long as the foreign spend is travel or supermarkets (or petrol) I always put it through my Pref. Rew. Gold card rather than my no-forieng fees Visa Debit,

    Both I consider to initially be zero cost (+3MR but 3% fee vs nothing), but the potential to earn with a conversion bonus later.
    [Need to offset the fact that the 3% outlay at time of purchase could be earning interest/return somewhere else, but I still do it.] Or if the spend including fee can be reclaimed on expenses, etc.

    For people who spend a lot abroad, either travel or supermarkets and petrol, it can be worth having.

    But I do completely agree that Amex annual fees have got out of hand, especially for a card type that has lower levels of acceptance by merchants and sometimes higher usage surcharges for customers.