American Express has started adding terms to some credit and charge cards excluding gift card purchases. While those terms aren’t being enforced right now, it doesn’t bode well for the future given how restrictive Amex has become.
Chuck at DoC highlighted this the other day. For example, the Blue Cash Everyday card has terms not only excluding gift card purchases from being eligible towards minimum spend requirements for a signup bonus, but also for earning Reward Dollars for day-to-day spend:
Eligible purchases are purchases for goods and services minus returns and other credits. Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of travelers checks, purchases or reloading of prepaid cards, purchases of gift cards, person-to-person payments, or purchases of other cash equivalents.
It should be noted that these terms aren’t necessarily new; as a couple of commenters on the DoC post pointed out, some cards have had this specific term included for a year or more. However, the fact that the exclusion is being actively added to more cards suggests that it’s on Amex’s radar and so they might start looking to enforce the terms more strictly for anyone they deem to be overly gaming the system.
The fact that they specifically mention gift cards in addition to prepaid cards suggests that earnings points/miles/cashback on third party gift card purchases could be at risk too.
What Does This Mean?
Considering Amex hasn’t put out any kind of statement regarding this, we’re left to speculate somewhat as to what this means. Looking at their past actions doesn’t bode well.
We already know that you shouldn’t meet minimum spend requirements on Amex cards by buying gift cards to get your signup bonus as they’ll claw back the bonus, if they even award it in the first place. They’ve stopped paying rewards on Simon Mall gift card purchases even outside of the signup bonus period. They clawed back Amex Offer credits for the Staples Amex Offer last year, resulting in a huge hit for people that took advantage of it with 99 employee cards. There’s even some kind of algorithm at play that decides if they’ll even offer you a signup bonus which appears to be – in some part – based on whether they think you’re going to be a profitable card member.
That shows Amex isn’t kidding around when it comes to stamping out behavior they’re not keen on. I therefore wouldn’t be surprised if we start seeing reports that some gift card purchases – particularly large scale ones – are no longer earning rewards. Grocery and drugstore purchases in multiples of $505.95 could be at risk, as well as large purchases from sites like GiftCards.com, GiftCardMall, MyGiftCardsPlus, etc.
Part of this will depend on what level of data retailers report to Amex. They can sometimes see if you’ve bought Visa gift cards, Mastercard gift cards, etc., so that makes it much easier for them to not offer rewards on that portion of spending. I imagine they’d still give rewards for a $25 Home Depot gift card purchase at Kroger, but maybe not a $900 Home Depot gift card purchase from MyGiftCardsPlus when they’re running a deal like this one.
High Spend Bonuses
I also wouldn’t be surprised if their initial focus is on cards that offer bonuses for high spending in addition to their regular rewards. For example, the Hilton Surpass card offers a free night when spending $15,000 and Greg’s written before about how you can manufacture status with Delta through credit card spend.
If you’re meeting that spend through gift card purchases – whether VGCs/MGCs or third party gift card reselling – that avenue might get closed off in the coming months or years.
What Should You Do
This all depends on your risk tolerance and your level of gift card spend. Like I said earlier, Amex doesn’t appear to be enforcing the gift card exclusion on day-to-day purchases other than at Simon Mall right now, so you might be fine. They might also be adding these terms now so that they can target the real heavy hitters in the future rather than people that spend $2,000 a month on gift cards.
If you’re risk averse though and are worried about not earning rewards on your gift card purchases, it might be worth moving that spend to cards that aren’t issued by Amex.
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Well good news is that I have weekly barbecues that I cater for where it requires me to spend a couple thousand dollars, sometimes more, all at one time at Safeway. Every week. At least Amex let’s us get multiple Amex gold cards. Same with having a couple RVs that I have to fill up every week at gas stations on my BRG
What does this mean exactly: “We already know that you shouldn’t meet minimum spend requirements on Amex cards to get your signup bonus as they’ll claw back the bonus, if they even award it in the first place”
Does it mean that if you get an AMEX card and meet, say, $3000 spend for the bonus and all of a sudden STOP putting spend on that card, they may subsequently revoke your bonus?
Sorry, that was bad phrasing on my part. It should have said you shouldn’t meet minimum spend by buying gift cards, so I’ve updated the post to include that.
Wait, did you just say 99 employee cards?? Did I read that right?
That’s the limit of how many employee cards you can have on business cards.
yeah I figured that part, I’m just in awe some folks manage those volumes. Somebody who has at least 99 employees who actually require credit cards, linked to a single business card, would be too busy with other things than chasing staples gift cards to get amex offers, so the cc’s are clearly set up for gaming. I’m not judging, I’m in it myself, just fascinated with volumes !
It was 99 “employee” cards 😉
You can also have 99 AU cards on personal accounts. But it doesn’t matter any more since Amex stopped allowing offers to be selected on every AU card. Was great a few years ago – had about 500 AU cards in my name.
Just got my Amex Hilton Ascend statement and AE did not give points to my 2k purchase made in an outlet for gift cards.
Was that at a Simon Mall or elsewhere?
Its Simon Mall
Yep, they stopped offering rewards on Simon Mall purchases a couple of months ago https://frequentmiler.com/did-amex-drop-the-bomb-on-simon-purchases/
Most credit card systems report one amount and one code to the credit card company. So Amex or Visa will know you spent 100.00 dollars at Kroger which is coded grocery. In this case Amex has no way to know you bought a gift card. However a 100 purchase from mygiftcardsplus is easy to identify.
It gets even harder for Amex if you buy a gift card and a carton of milk from Kroger. So it looks like gift card deals at grocery stores may be the next home for manufacturered spending. However they are often tied to and limited by loyalty cards (though you can always have multiple loyalty cards).
What is the benefit of buying high-value Visa gift cards? I get it for last-minute achieving spending requirements. But otherwise, you now have thousands of dollars in gift card to spend that won’t earn any additional points. Why not just buy direct with the credit card? I know there’s a resale market, but generally it’s not dollar for dollar. Educate me!
This should help https://frequentmiler.com/manufactured-spending-complete-guide/#Buy_Money_orders
@Jake. Arguably people use VGC/MCGC;s etc… to MS for status or spending bonuses. It’s a cost/bene thing since these cards can cost $5.95 and more.If spending an extra $15 or $20K on cards raises one from Platinum to Diamond on Delta(just one example) via MQM’s some may find it worthwhile. Huge YMMV of course.
It just seems that buying pre-paid debit cards is just a way of shifting spending rather than manufacturing. Buying money orders I get– would be awesome if I could find a round-a-bout way to pay mortgage with credit cards.
Rather than buying gift cards, I’ve always found it easier to pre-pay large bills like insurance if I need to hit a spend requirement.
Money orders are a roundabout way to pay your mortgage. Let’s say your mortgage is $1,000 per month. Buy 2x $500 Visa gift cards for $1,011.90 including activation fees. Pay <$1 for a money order and pay that into a checking account. You've (sort of) paid for your mortgage by credit card with fees of ~$13 which is 1.3%. If you're earning rewards worth greater than 1.3%, you're coming out ahead.
Except why stop at $1,000? If it’s profitable at $1000, it’s 10x more profitable at $10,000 and 100x more profitable at $100K. That’s why gcs are nice – if – you earn more than it costs in time/fuel/hassle.