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Get a refund to your American Express card? Here’s how it impacts your vouchers and bonuses

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A recent email from a reader reminded me that you may not be familiar with how American Express treats refunds when you have a spend target to hit.

The answer is simple:  all American Express spend targets are based on NET spend, not GROSS spend.  Your spending is adjusted for refunds, irrespective of when the original transaction took place.

How does American Express deal with refunds

The “irrespective of when the original transaction took place” bit is important. Here is an example.

My British Airways American Express Premium Plus membership year runs to late May.  I need to spend £10,000 between late May 2022 and late May 2023 to receive my next 2-4-1 Avios companion voucher.

Let’s assume that I am about to receive a £2,000 refund from British Airways for a flight booked in April 2022. Because it was booked in my previous card year, it counted towards my 2021/22 companion voucher.

When this refund turns up, it counts against my target spend for the current year.  This means that I will need to spend £12,000 this year – not £10,000 – in order to trigger my 2-4-1 voucher.

It makes no difference that the original purchase took place in my old membership year.  Amex deducts the £2,000 from my gross spending in this membership year so, to hit £10,000 of net spend, I now need to hit £12,000 of gross spend.

More obviously, the refund would also count against my £10,000 total spending if the original purchase has taken place in my current membership year.

The identical situation applies if you are working towards any other American Express spend bonuses:

  • Any sign-up bonus on any American Express card (see below)
How does American Express handle refunds

What happens if you trigger an Amex sign-up bonus and then receive a refund?

This is a situation which can create additional problems, unfortunately.

Amex will remove your sign-up bonus if a refund is received which takes your net spending during the (usually three months) bonus period below the bonus threshold.

There are two scenarios here:

  • if you are still inside your three month bonus period, you can get the bonus returned by doing additional spending which takes you back over the net spend target
  • if you are OUTSIDE your three month bonus period – which can easily happen if you cancel a flight a few months after booking it – you’re stuck. Amex will remove your sign-up bonus and you have no way of getting it back.

This can cause your points balance to become negative. This is very likely in the case of British Airways or Marriott Bonvoy American Express cards, where your sign up bonus has already been transferred. American Express cannot pull back points from British Airways or Marriott. You can easily end up with a points balance of ‘minus 20,000’ in your American Express account which will take a number of years to whittle down to zero through fresh spending.

If a Membership Rewards points bonus is removed, it is likely that the points will still be sitting in your American Express account unless you transferred them to a partner. This means that you won’t drop into a negative balance.

British Airways American Express 2-4-1 companion vouchers are treated differently

This situation does not apply to 2-4-1 vouchers on British Airways American Express cards. If you have triggered your voucher for the current card year and subsequently receive a refund, the voucher is NOT removed from your BA account.

Does this apply to other card issuers too?

I don’t know, unfortunately.  It will vary on a case by case basis, but you should assume any award is based on net spend and not gross spend.

This would include:

  • A free night for spending £10,000 in a year on the IHG Rewards Club Premium Mastercard (no longer available to new applicants)

PS. This article (clicks) looks at all of the most valuable UK credit card sign up bonuses.

Want to earn more points from credit cards? – December 2023 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher at £20,000 Read our full review

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

SPECIAL OFFER: Until 9th January 2024, you will receive 30,000 Membership Rewards points (convertible to 30,000 Avios) with American Express Preferred Rewards Gold. You receive 25,000 points if you spend £3,000 in three months and a further 5,000 points if you hold the card for 15 months. You can apply here.

SPECIAL OFFER: Until 9th January 2024, you will receive a huge 100,000 Membership Rewards points (convertible to 100,000 Avios) with The Platinum Card. You receive 75,000 points if you spend £10,000 in six months and a further 25,000 points if you hold the card for 15 months. You can apply here.

British Airways American Express Premium Plus

25,000 Avios and the famous annual 2-4-1 voucher Read our full review

American Express Preferred Rewards Gold

Your best beginner’s card – 30,000 points (TO 9th JANUARY), FREE for a year & four airport ….. Read our full review

The Platinum Card from American Express

Crazy 100,000 points (TO 9th JANUARY) and a huge range of valuable benefits – for a fee Read our full review

Virgin Atlantic Reward+ Mastercard

15,000 bonus points and 1.5 points for every £1 you spend Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

American Express Business Platinum

40,000 points bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Capital On Tap Business Rewards Visa

Get a 10,000 points bonus plus an extra 500 points for our readers Read our full review

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.

Barclaycard Select Cashback credit card

1% cashback and no annual fee Read our full review

Comments (51)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Toto says:

    Sorry if this has covered elsewhere before…

    What happens when you decide to downgrade your BAPP card after the voucher is triggered, when you actually try to use it to book a flight? Do they enforce the rule that you must use the BAPP card to pay for the cash element, or is it still ok as long as its a Amex?

    • lumma says:

      You can pay with any AMEX, doesn’t need to be a BA one or even in your name.

    • Grimz says:

      Don’t need to downgrade just cancel the card. As long as you or a friend have an Amex card to use when redeeming the voucher.

      • Toto says:

        Thanks! Yes, makes more sense to cancel outright and reapply in 24m for the bonus!

  • Patrick says:

    Say you take out a new card on 1 Jan with a 3m sign up bonus requiring a £3k spend. In the last week of March, as your first purchase, you spend £3001 on flights and trigger your welcome bonus. It also forms part of your exact £10k spend for the year, triggering a 241. In February the following year you are due to fly but a snow storm (light dusting) closes LHR for 2 days. With no sensible reroutes available you accept a refund from the airline. Is it correct to say:

    – you will have broken your welcome bonus terms from the previous year and the welcome points will be taken back, most likely resulting in a negative balance
    – in the current (second) year you will now need to spend £13,001
    – your 241 will remain valid despite the previous year total spend coming down to £6999

    • Rob says:

      Yes, yes, yes.

      In practice, I would guess that at some point the system loses track of the original transaction so the first ‘yes’ may not happen, but you should assume it will.

      • jjoohhnn says:

        I’m sure BA would be more than happy to give your a voucher for the value rather than cash to avoid this problem though!

        • Patrick says:

          Thanks guys. Handy to be aware of any unintended consequences that could arise over the years.

  • Slonik says:

    It’s a similar thing with the Virgin credit card. I had a holiday cancelled during Covid which resulted in a large refund. They didn’t deduct the miles they already credited to me from my Virgin miles account, but they wouldn’t then credit me any more miles from card spend until I had cleared the deficit. So, eg, if you get a refund for £100 for which you have already received the air miles, you then won’t receive any more air miles until you have re-spent that £100. It took me ages to work out why I wasn’t being credited any new miles….

  • Save East Coast Rewards says:

    Obviously now BA book with confidence is no more you can’t just request a voucher for any booking, but are you allowed to request a voucher in times where you would otherwise get a cash refund? It might be useful if you don’t want the refund to hit your card.

  • Dickie H says:

    So I don’t think this question has yet been covered:
    Suppose you cancel your card on 1 January.
    But a transaction is then refunded to your cancelled card, say on 1 March.
    Does this reset the date on which you’d next become eligible for a sign-up bonus if you reapplied for the card (i.e. in this example, from 1 Jan 2025 to 1 March 2025)?

    • Rob says:

      Very good question … so niche I have no idea.

    • Alan says:

      No as I understand it the SUB eligibility is related to the date of account closure in the letter Amex send you.

    • TGLoyalty says:

      No. The activity after the card closes doesn’t count.

      • Dickie H says:

        Thanks all! That’s exactly the situation I find myself in – in fact my refund came through almost a year after I’d cancelled my card. I wouldn’t want to have to wait * another * 2 years if I got it wrong!

  • Stu says:

    I don’t quite understand how anyone who can afford a £250 a year card can struggle to hit £10K annual spend in this day and age of rocketing prices? My year runs from mid-August and I’ve usually hit my spend target by December!

    • MrMcBurger says:

      Because they have more than reward card & may want to collect points for something else? I still have Barclays HH card for example as well as Virgin Card. I kind of plan long haul holidays a good 2 years in advance to give me chance to collect miles, etc. I loved collecting Marriot/SPG, but that run has come to an end. Still, looking back, I had a 5 nights in SF staying at the Westin on Union Square. 5 nights comped for xmas markets in Innsbruck & travelling by the free bus to the surrounding ski resort & was in Munich for the Beer Festival this year that cost me £2 + 39,000 avios & 5 nights in East Munich Marriott!!! Still have 45k Marriott points.

  • Nick says:

    Am I correct in thinking that if I hit the £3000 spending target on BAPP card and receive the bonus, this cannot be taken away if I get a refund that takes be back under £3000 spending. I understand the AVIOS for the refund amount can be taken but the bonus Avios can’t be? Thanks I’m advance

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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