Amex cuts the rewards on its cashback cards – a sign of things to come?

American Express relaunched its two Platinum cashback cards yesterday with reduced rewards.

Whilst this is not strictly relevant for Head for Points, because the cards do not give miles or points, it is an interesting indication of how Amex is thinking.  This is because these cards are immune to the EU cap on interchange fees.  Whilst there is some dispute over whether the BA card is immune – as it is co-branded – the cashback cards are definitely OK.

Despite this, Amex is still trimming the benefits.  Why is it doing this?  Possible options are:

to make up for losses on other cards which are subject to the interchange fee cap, or

because the card market is now less competitive with MasterCard and Visa issuers restricted in what they can pay out in rewards once existing contracts expire

That said, the cards are still pretty good as I will outline below.

Before going on I am, as usual, obliged to tell you that the Platinum Cashback credit card has a representative APR of 28.2% variable, including the £25 fee, based on a notional £1,200 credit limit.  The interest rate on purchases is 22.9% variable.  The Platinum Cashback Everyday credit card has a representative APR of 22.9%.

American Express Platinum Cashback credit cards review

What is the difference between the Amex Platinum Cashback and the Amex Platinum Cashback Everyday cards?

Basically, the annual fee and the cashback tiers.  The Platinum Cashback card comes with a £25 annual fee.  The Platinum Cashback Everyday card does not.

Following the changes yesterday, the £25 Platinum Cashback card pays you cashback at the following rates:

  • 5% cashback on all your spending in the first three months, up to £2,500 of purchases
  • 1% back if you spend under £10,000 from month 4 to month 12 (and annually thereafter)
  • 1.25% back on your spend over £10,000 from month 4 to month 12 (and annually thereafter)

This is a drop on the old structure which was:

  • 5% cashback on all your spending in the first three months, up to £2,500 of purchases
  • 2.5% cashback, uncapped, in your ‘card anniversary month’ if you spent over £10,001 in the previous year
  • 1.25% on all spending

Ignoring the sign-up bonus, someone spending £800 per month on the card would now get an annual return of £71 (1% of £9600 – £25 card fee) compared with £95 (1.25% of £9600 – £25 card fee).

The free Platinum Cashback Everyday card has a different tiered system:

  • 5% cashback on all your spending in the first three months, up to £2,000 of purchases

After the first three months, you will earn:

  • 0.5% on the first £5,000 of spend (but you get nothing if you spend under £3,000)
  • 1% back on your spend over £5,000

The old structure looked like this:

  • 5% cashback on all your spending in the first three months, up to £2,000 of purchases

After the first three months, you would earn:

  • 0.5% on the first £3,500 of spend (but you get nothing if you spend under £3,000)
  • 1% back on your spend between £3,500 and £7,500
  • 1.25% back on your spend above £7,500

Cashback is paid in a lump sum at the end of each card year.

Ignoring the sign-up bonus, someone spending £800 per month on the Platinum Cashback Everyday card would see their return drop from £83.75 to £71.

An unintended consequence …..

I’m not sure that American Express has done their maths properly here!

Under the old reward structure, and ignoring the opening bonus which is only available in the first year, your break-even point for the £25 annual Platinum Cashback card was £3,350.

Anyone spending more than £3,350 would have been better off, even after paying the £25 fee, with Platinum Cashback rather than the free Platinum Cashback Everyday.

However, that has now changed.

The break-even point is now £10,000.  For everyone except the highest spenders, you are now better off with the free Platinum Cashback Everyday card.

For example:

spend £9,000 per year and you will receive £65 on the free Platinum Cashback Everyday and the same £65 on the Platinum Cashback card, adjusting for the fee

spend £11,000 per year and you will receive £85 on the free Platinum Cashback Everyday and £87.50 on the Platinum Cashback card, adjusting for the fee

I can’t believe that Amex intended this to happen!

Under the old structure, the break-even point was £3,350.  Why?  Well, £3,350 of spend on the Cashback card earned you (at 1.25%) £41.88 back.  £3,350 on the Cashback Everyday card got you £16.75 back.    After £3,350 of spend, your £25 fee had already been covered by the additional cashback earned.

For the majority of people, it now makes more sense to have the free Platinum Cashback Everyday card.

What is the sign-up bonus?

Both cards have the usual generous American Express sign-up bonuses:

The Amex Platinum Cashback card pays you 5% back on your spending in the first three months, to a maximum spend of £2,500 (so capped at £125 back).

The Amex Platinum Cashback Everyday card pays you 5% back on your spending in the first three months, to a maximum spend of £2,000 (so capped at £100 back).

However, unless you are planning on spending over £10,000 between month 4 and month 12, I would not necessarily be tempted by the extra £25 as the free card is better long term.

What more should I know?

You do not receive your cashback month by month.  Instead, it is paid onto your Amex statement at the end of each card year.

However, this does not mean that it is more difficult to cancel the Cashback card with the £25 fee.  This is because Amex will refund your fee, pro-rata, when you cancel.  If you feel like dumping the card at any point, wait until the start of your next card year for the cashback from the previous year to arrive.  You can then cancel, and should get back at least £23 of your £25 fee as a pro-rata refund.  If you have not used the card since your renewal date, you should get the full fee back.

American Express no longer has a minimum income requirement for its cards.

That is a far longer analysis than I planned to write!  However, the original point of the article – that Amex appears happy to cut benefits on cards which are not subject to the interchange fee cap – is worth noting.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.  By recommending credit cards on this site, I am – technically – acting as a credit broker.  Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

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  1. Apologies for going immediately OT, but has anyone has their BA Amex PP letter about the annual fee increasing from £150 to £195, and if so, what’s the effective date of the change on your letter please?

    I ask as I’m curious as to whether the fact my increase being in line with my statement date is deliberate or coincidental, as if it’s coincidental, I’ll be twerking my statement date by a couple of days to avoid they increase until next year!

    • * tweaking * …. autocorrect at it’s best!!

    • Hi. I had mine and the fee increase was from my card anniversary date (I.e. the date my annual fee would become due as usual). In my case this is 02 May but I’ll not get the statement which includes the fee until the end of May. Hope this helps

      • I had mine through and switched to the free version… I’ve got 2 x BA vouchers to use still and seem to be acquiring avios faster than I can spend them due to the cheap flights from Qatar etc.

  2. Do these changes also apply to existing users?

    • With the BA changes, they left it a few months and then hit existing cardholders – although only from your next renewal.

  3. the platinum everyday cash back one does, I have one….

  4. Some people last week mentioned this. Must be widely available if 140,000 slots but not on our 4 family cards …..

  5. Worth noting that the basic cash back card comes with 21 months interest free, if you apply through (I think) MSE.

  6. Eugh, a sign of things to come elsewhere with AMEX I’m sure. Rather than attract hoards of business when MBNA/Lloyds etc inevitably cut their returns for customers, Amex look like they want to play the race to the bottom.

    The £10K break even shows someone’s not thinking..

  7. Yep, the £25 fee card also has the statement credit offers – I have one!

  8. OT. Currently have Amex Plat rewards. Wanted to refer husband for gold but only seems to allow to refer for plat. Any way around this?

  9. Whilst Amex is not (fully) subject to the interchange rules they do directly negotiate with merchants on rates (unlike visa or MasterCard). I expect there pricing has come under pressure as they renew these deals given the large difference between visa and MasterCard interchange and current Amex merchant rates. Means less room for rewards or lower merchant coverage/more surcharge for.

    • Exactly. People have been far too unconscious of this. It is often said that the regs don’t apply to Amex and so they are unaffected by them. Ignoring the fact that some Amex cards actually are within the scope- the first part is correct, but the second one never was. the regs just emphasise the gap between Amex fees and visa/MC. Merchants are not going to ignore that- the commercial pressure on Amex to cut rates must be massive- I doubt there is a mainstream retailer out there that couldn’t afford to drop Amex if it had to.

    • Interesting thought. The last time I was in contact with Amex (as a small business owner) was several years ago now, but they sent me a letter saying quite clearly that they were NOT negotiating over charges and everyone would be paying exactly the same. Like most travel businesses I surcharged for card payments, though I did not aim to recover the full charge. Nevertheless, customers were amazed that I was charging LESS for accepting Amex than for Visa/MasterCard (and until I moved away from Worldpay I was having to charge significantly more for MasterCard World, such as the Creation operated Marriott and IHG cards).

      • Axel Heyst says:

        I was offered a reduced rate of 1.99% for Amex transactions for my small business account by Amex after I closed it earlier this year.

        Had to ditch Worldpay and move to a local agent using PaymentSense. I think I’m paying the same % for using the Curve card.

  10. Oh well, lucky that the BMI cards continue to offer outsize value, while those continue to offer 2.5/£ it’s plain sailing for us all :)

  11. agree – I am in ‘the regions’ so Avios and RFS are not what they used to be now we don’t have free connections to LHR. I am focusing my points on VA and hotel status..

  12. Anyone know what the break-even point for the Platinum Charge Card? I always wanted one but just can’t justify the high annual fee!

    • You need to decide for yourself how much value you ascribe to the different benefits. Some you’ll retain for the year even if you cancel and receive a pro-rata refund of the costs. Also depends how you value the sign-up bonus.

    • PointsMaker says:

      Get the gold card (free in first year) then upgrade offer to platinum. Experience shows the fee isn’t charged until renewal.

  13. Worried about if you get only £1.99 back on a £199.50 instead of £2.00??? Next level penny pinching!

  14. Damn. Haven’t got it yet but frustrating. Maximising the 5% sign-up bonus for just now. Apparently Santander 123 also plummeting in rate too I believe :(