Amex’s brilliant move toward monthly bonuses. Will it be enough to counter Chase?

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In March 2017, Amex increased the annual fee on consumer Platinum cards from $450 to $550.  To some, the net change was positive because Amex also threw in up to $200 per year in Uber credits (See: Amex drives in wrong direction with Uber).  Those credits are doled out monthly: $15 per month January through November, and $35 in December.  If you don’t use your credits in any given month, the credits do not carry forward.

More recently, Amex added a similar perk to their consumer Platinum cards: Up to $100 per year in Saks  Fifth Avenue credit.  In this case, the benefit kicks in only if you register for it, and it is doled out in 6 month chunks: $50 January through June + $50 July through December.

And now we’ve learned that Amex’s Premier Rewards Gold card will soon be rebranded, and will include new and awesome category bonuses for spend, and will include $10 per month “dining” credit towards a specific list of food delivery services and restaurants: Grubhub, Seamless, The Cheesecake Factory, Ruth’s Chris Steak House, and participating Shake Shack locations.

Why this is brilliant

For years, many credit cards have offered annual perks.  Credit cards branded by Southwest, JetBlue, Radisson, and others offer bonus points each year when you renew.  A number of hotel branded cards offer a free night certificate.  Certain United cards offer United Club Lounge passes.  Some Delta cards and Alaska cards offer companion tickets.  All of these are offered once per year, upon renewal, and are tied specifically to the co-brand.  And, in all of these cases, you have a full year to use the benefit before its value is lost.

Non-cobranded cards often offer annual perks that are not tied to any brands.  The Chase Sapphire Reserve card, for example, offers $300 in travel reimbursements each year.   Similarly, the US Bank Altitude Reserve offers $325 in in travel credits per year.  And, Amex Platinum cards offer $200 in airline fee credits per year (but only for the one airline you select as your preferred airline).

Amex’s monthly bonuses are different (I realize that the Saks benefit isn’t really monthly (it’s “half-yearly”), but I’m going to lump it in with the Uber credits and dining credits as if it is monthly to simplify the conversation…).  These bonuses are brand-specific, and doled out in dribs and drabs…

Brand specific bonuses…

The Amex cards that offer monthly bonuses aren’t tied to particular brands, but the monthly bonuses are.  What that means (my speculation): The brands pay for these benefits.  I can’t think of any other rational explanation for why Amex would pick these specific brands (Uber, Saks, The Cheesecake Factory, etc.).  It’s possible that the brands directly pay the credits as they happen, but I think it’s more likely that the brands pay set marketing fees to Amex and then Amex pays the credits.  Many other payment structures are possible, but the point here is that Amex has found a way to provide perceived valuable benefits at little or no cost to themselves.

Dribs and drabs…

I doubt any of Amex’s customers like the fact that these benefits are doled out in small monthly bits, but for Amex and the brands involved it makes a lot of sense.  The brands want repeat customers.  The benefit structures encourage that. When choosing between various food delivery services, a customer who gets $10 monthly credit will most likely use GrubHub or Seamless every time, even if they order more than once a month.  Similarly, Amex Platinum cardholders will most likely get used to choosing Uber over Lyft, even if they’ve already used up their monthly credit.

The monthly nature of the benefits makes it likely that most Amex customers won’t get full value from each of these benefits.  But, they most likely will get some benefit.  This is important at credit card renewal time.  Psychologically, a cardmember who received some benefit will probably be more inclined to keep the card than one who missed out on a key benefit entirely.  In other words, I think this means that Amex will be able to retain a lot of customers based on how they perceive the benefit (e.g. $120 per year!) rather than how much they actually saved in the past.

More to come?

If I’m right that the brands are paying for some or all of the expense of providing these benefits, then it seems extremely likely to me that we’ll see more of these benefits going forward.  I expect that Amex requires a multi-year commitment from each brand before they’ll go through the expense of updating a product’s benefit structure.  So, I don’t think we’ll see a slew of these benefits appear overnight, but I do think they’re coming.

My guess is that we’ll see something happen with either Amex Business Platinum cards or Amex Business Gold Rewards cards (or both).  For example, I wouldn’t be surprised to see monthly credits with AT&T business internet, or maybe with an office supply store like Staples.

So far we’ve only seen these offers on high end cards, but I do think it’s possible that some brands will want to target everyday cards.  And, here I literally mean the no-fee Amex Everyday or the Amex Everyday Preferred.  Which big brands are most eager to attract Amex’s every day customers?  Sams Club, perhaps?  Or maybe a gas station chain?  Or clothing stores?  Time will tell.

What this means to Frequent Miler readers

Just as we’ve learned how to get full value from airline fee credits (see: Amex Airline Fee Reimbursements. What still works?), we will learn how to get maximum value from the new monthly credits.  I expect that many readers will earn these credits in non-standard ways.  Here are some examples:

  • Uber: Order food from Uber Eats once a month if you don’t use Uber directly for rides.
  • Saks: When you find yourself near a Saks store, pop in to buy a $50 gift card if you don’t have immediate shopping needs (I recommend doing this in-store because the minimum gift card amount online is $150).  If you don’t have any desire to shop at Saks ever, you should be able to resell the gift card for about 80% of its value (e.g. Sell a $50 card for $40).
  • Dining credits: Personally I don’t expect to have any problem using the $10 credit every month via GrubHub deliveries or by stopping into Ruths Chris steakhouse for an occasional happy hour.  Otherwise, I’d want to pop into one of the supported restaurants once per month to see if I could buy a $10 gift card.  It looks like online gift card orders won’t work because they are either handled by Cashstar or they have higher than $10 minimums.

Above are just a few examples.  Other methods have been found and will be found to get more value from these benefits.  A great place to discuss these ideas is in our Frequent Miler Insiders Facebook Group.  If you’re not already a member, consider joining!

When annual fees come due for credit cards you should always evaluate the benefits you get from the card vs. the annual fee.  Ideally the benefits are worth significantly more than the annual fee.  That’s when you’re getting a good deal.  Otherwise, I recommend either cancelling the card or downgrading to a low-fee or no-fee card.

When evaluating benefits like the ones described above, I recommend assessing not their total dollar value, but rather the amount you would be willing to pay for a subscription.  For example, if Uber offered you a chance to pay a subscription to get $15 off per month (and $35 off each December), how much would you be willing to pay annually for that subscription?  Obviously you wouldn’t pay $200 per year, but maybe if you knew that you would definitely spend at least that much per month anyway then you’d be willing to pay $150 or $175.  Those who don’t expect to use the service every month should come up with a much lower number.

Summary

Amex appears to have come up with a great way to offer value to customers at little expense to themselves.  This is great for them because it gives them a way to compete more effectively with other card issuers without hurting profits.  And, it’s great for cardholders who can benefit from these perks.  Not all of these perks will be meaningful to everyone, but when there’s a good fit I think that everyone will be happy: credit card customers, Amex, and the brands who support these offers.

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