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Amex USA bans card churning …. UK to follow?

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Follow a number of rumours in recent weeks, American Express’s USA operation has now confirmed that card ‘churning’ will not be allowed from 2nd May.

Here is the statement that it issued:

In order to ensure fairness and clarity with our Card Members, we will be making a change to our acquisition incentive control rules for American Express Consumer Cards. Beginning May 2, 2014, welcome bonus offers will not be available to applicants who have or have had the Card they’re applying for. For example, if a Card Member once had or has a Platinum Card, they will not be eligible to receive a welcome bonus offer on a new Platinum Card application.

Amex card

Just so everyone is clear, there is currently no public statement that this will also apply to the UK market.  However, it would be naïve to believe that a policy brought in for the US market will not eventually appear here.

In general, I would not consider this to be a major disaster for anyone if it was implemented.

If Amex brought in exactly the same policy – which means that you cannot get EXACTLY the same card twice and still receive a sign-up bonus – then you would still be able to obtain the following cards over a period of a couple of years:

American Express Preferred Rewards Gold – 20,000 Membership Rewards points

American Express Platinum – 30,000 Membership Rewards points

British Airways American Express Premium Plus – 25,000 Avios

British Airways American Express – 9,000 Avios

Starwood Preferred Guest American Express – 21,000 SPG points

(The bonuses quoted above are all current with the exception of SPG, which is offered at this rate once or twice a year.)

Assuming you converted all these points into Avios, you would earn 110,000 Avios points.

And your partner could do the same!

(Someone who was really keen could also apply for the American Express Nectar card and receive 20,000 Nectar points, worth £100 of easyJet credit.  If you are self employed, there could be a further 20,000 Avios from the American Express Gold Business card and (occasionally, not at present) 60,000 Avios from the American Express Platinum Business card.)

If that is ‘the worst case scenario’ then, frankly, it seems a pretty good one to me. 

There are a small number of people who are now on their 4th, 5th or more Amex Gold card, having cancelled and reapplied on a regular basis over recent years – each time with a 6-month gap.  If such a restriction was launched here, these people would clearly lose out.

This is a tiny minority, however, even amongst Head for Points readers.  The only American Express card I have ever had more than once is the SPG Amex, which I have had twice.  I have also had a Platinum card since 1999 and a British Airways Premium Plus since it was launched in 2002ish, so I think American Express is doing OK there.

It is also worth noting that American Express is not saying that you cannot apply for a card which you have previously cancelled.  It is simply saying that you cannot receive another sign-up bonus if you are accepted.  All other benefits will still be provided.

To clarify again – there is currently no formal plan to change the rules in the UK to match the new rules in the US.  But it would not be the end of the world if they did.

(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.)

Comments (94)

  • CV says:

    As others have already said Amex in the US does offer a different range of benefits to Amex UK, likewise in others countries the benefits differ again – and in comparison we in the UK get a good deal.

    But if they choose to block card churning then they will be no different to MBNA and will need to offer something new to set themselves apart whether it is 0% forex, big sign up bonus or lounge passes (as with Gold card). It will be interesting to see how it works, I find Amex admin to be a bit random.

  • Trevor says:

    Unusually, I disagree with Raffles. I think bringing it in here would be a major disaster. Sure, by applying one by one for all cards someone new might be able to earn 110k Avios, but for a family of 4, that only just earns a medium haul trip, and that’s a once off… over, job done!

    For those of us who have already applied for one of more different cards, which I’d guess to be a large number of HfP readers, the total decreases substantially, and any vaguely numerate person would have aimed for the bigger point earners first leaving them picking up whatever crumbs are left which won’t amount to much.

    As I have a London-based job and do no business travel, I earn pretty much all my points from credit cards, so if the offers dry up or churners are forced off the welcome list, that’s it, game over. I’d see no point in playing a game that would take forever to achieve anything – 50 points here and there from Avios Suitcase or whatever is hardly going to get me anywhere since my Avios suitcase would be empty.

    For the time invested in collecting points, I already wonder if it’s worth it at such a poor rate of return. Sure it’s a hobby that can have fun results and is profitable where other hobbies are a drain, but in the 18 months since I started, I’ve already seen a decline in offers, and if I had to put this many hours into something fee-earning, I’d be able to just pay for a lot of flights/hotels without worrying about redemption availability and other restrictions.

    Yes, I’d still collect and convert Clubcard points, and maybe do the odd Big Win (I’m already not completing it this season), but for me, no Amex = no point.

    • Brian says:

      Hmmm – I’d say ‘a major disaster’ is a tsunami hitting Asia, or Somerset being flooded for months. Not being able to get more than 200,000 odd Avios might be a bit limiting to those used to getting more, but nothing more than that.

      I’m with Raffles on this one – we should be grateful that we’ve been able to churn up to now (and beyond, for now), but we can’t complain if and when this stops.

      • Trevor says:

        I’d say ‘a major disaster’ is an asteriod 10km or bigger slamming into earth and wiping out life as we know it – a tsunami is just a big wave, but nothing more than that. No wait, our closest star going supernova – there’s a disaster, making the impact of a little space dust rather insignificant 😉

        It’s all relative, and since we aren’t talking natural disasters here, rather irrelevant. But since we are talking loyalty schemes and collecting points (note, this is “Head for Points”, not “Head for Natural Phenomenon”), wiping out the ability for existing points hobbyists to benefit from the biggest contributor is very relative and a major disaster.

        And no-one was complaining, heck it isn’t even happening here (I checked Amex’s fineprint yesterday right after I saw this), but I can’t imagine we’ll all grin when the carpet is pulled from under us.

  • Danksy says:

    First off I think there are some pretty unfair comments on this from some quarters directed towards Raffles. Sure I’m sure he makes a bit from referrals and advertising, but also he’s helped many people in de-mystifying the whole business of travel loyalty schemes, and I for one have enjoyed a few long haul first class flights for a fraction of the true cost.

    As for card churning, AMEX and others would have clearly factored this into their commercial model and I’m sure they arrived at the 6 month rule for a reason; namely “pay-back” it would not have been just plucked out of the air! What we don’t know is the value of points (i.e how they value them and how they are recognised in their balance sheet position), and also what share of the liabiltiy AMEX takes Vs the backer of the points (SPG etc.)

    Lets also not forget the revenue streams that the card issuers get.

    1. Commission (AMEX 5%) on all transactions that go through the cards, I’ve probably given them £5k of income over the last year or two , so really are they losing out? AMEX is also a marketing channel for these companies, which itself has a value

    2. Advertising revenue from partner organisations.

    3. Sign-up fees from partner organisations (customer acquisition is costly in a competitive market)

    4. Annual Card Fees

    Card issuers are able to do this at a very small marginal cost.

    1. They have the infrastructure and scale to do this very, very cheaply.
    2. The value of the points between travel firms will be a fraction of the perceived value to the likes of us (they use many points to fill what would otherwise be surplus capacity)

    They simply wouldn’t allow churn if it didn’t make commercial sense!

    Having said that in a much more competitive card market (USA) it seems an odd move, when there is so much choice. Commercially it may have made more sense to have done it elsewhere first!

    • Rob says:

      This site has never encouraged ‘structured’ card churning (which is not the same as opportunistically jumping on a good sign up deal). I have been doing this for 20 years now and you can only do that by keeping Amex, Tesco, BA etc onside.

    • Nick says:

      I’d be amazed if Amex made anything like 5% on most transactions in the UK. It’s probably about half that.

      • squills says:

        Amex merchant rates vary considerably according to customer. So a Tesco will negotiate a rate significantly under 3% whereas Ye Olde Corner Shoppe won’t have that muscle.

  • oyster says:

    I recently cancelled my Amex plat, having held it for 7 years so I’m not a churner. BUT, given Amex have massively upped the fee, restricted travel insurance and now losing Oneworld Sapphire benefits, what incentives could Amex provide to encourage me back at some point if they were not to offer acquisition bonuses?

    Ultimately an easier way would simply be to move the churn rule from 6 months to say 2 years. This would prevent mass churning without disincentivising the return of previous ‘genuine’ customers.

    • Rob says:

      I expect, in reality, 2 years would be OK. Plat has real issues now – AA and US Airways lounge access ends this week and Delta will stop allowing guests. Add in the end of Cathay Gold and they need to pull something out of the hat – and for the long term, not just a one-off £50 deal.

      • oyster says:

        To be completely fair to Amex, they did add guests to Priority Pass to both main and supplementary plat holders not long ago. This is a good extra benefit for a family.

  • andy L says:

    This again is another supremely interesting post from Raffles and great discussion in the comments. I am personally very grateful to Raffles and HfP and everyone who takes the time to comment – for all the hints, tips, and details of people’s activities. I feel mixed about this news. Of course Amex is an intelligent organisation that must surely be able to differentiated between genuine and shall we say “more opportunistic” customers. It is within their gift to chop and change rules and regs. I am very thankful for all the benefits Amex has brought me, and obviously hope the benefits and opportunities increase and become more varied. If they don’t …..well – we cannot say we have not had the opportunities. – for many of us they have been there for some time. Raffles and HfP have helped many of us achieve and beat our targets. For that I am very grateful. It would be a shame in the unlikely event of a collapse in the “earn and burn” hobby we enjoy…. but it would not be the end of the world…. I would miss the benefits and the banter.. but after all these are “first world problems”.

    Thanks again to Raffles for all the hard work.

  • Farringdon says:

    Not surprising really. When a small but material number of people were abusing the system by aggressive churning, it was inevitable that there would be some tightening up of the rules.

    Raffles has been saying for a while that Amex is fully aware of the issue, with a suggestion that they might change the rules.

    A lifetime rule seems counterproductive for the card issuers (and would discourage people who have legitimately been away for a long time to sign up for the card again). Something like a 2 year rule, which others have suggested above, sounds very reasonable.

    • Flieduk says:

      Depends what you mean by a two year rule. One sign up bonus every two years? Sounds very reasonable.

      Cannot get the bonus if you have had a MR AMEX in the last two years? THAT is counterproductive

  • Polly says:

    AndyL, I agree with you above, we have a good thing going, and perhaps people might slow down their churning for a bit, as long term we might all continue to benefit. We can mix and match the cards over a two year period and gain from them all, which is a reasonable time frame. Thanks again raffles, let’s hope things stay as they do here in the UK.

  • David says:

    I can see why Amex would have brought this in first in the US, because it’s so much easier to churn there. You get many more manufactured spending opportunities, such as Amazon Payments and Amex’s own Bluebird and Serve accounts (not to mention buying $1 coins from the Mint which a lot of people used to do). Plus it’s pretty standard to charge no annual fee for the first year on most cards, which encourages churning.