Estimating risk in Amex’s new rule

17

As Nick reported yesterday in the post “Amex launches a sneak attack in the war on gaming,” Amex has added new terms to their credit card offers.  Previously almost all Amex welcome offers included the terms: “Welcome offer not available to applicants who have or have had this Card.”  We refer to this as their “lifetime” language.  As in, we can get the bonus on an Amex card once in a lifetime (except when a targeted offer doesn’t include those terms).

New: Amex kept the lifetime language and added additional rules:

We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.

That’s extremely unfortunate language.  To me it basically means that you may or may not get the welcome bonus depending upon whether or not Amex likes you.

This presents a big problem for those of us who have been signing up for cards primarily to earn points and miles.  If we signup for a new card we won’t know whether or not we are eligible for the bonus until after we complete minimum spend.  Even then, the only way we’ll know for sure that we were eligible is when we see the bonus appear.

Guessing the Rules

Amex already has language in their offer terms against meeting spend requirements by buying gift cards, buying & returning items, etc. (The Amex war on gaming heats up).  So, let’s assume that the primary new gotcha here is the “number of American Express Cards you have opened and closed.”

Obviously, if you have a history of opening lots of cards and closing them soon after receiving the welcome bonus, then it’s easy for Amex to identify you as the type of customer they don’t want.  That pattern means that you’re reaping the rewards of welcome bonuses without really offering Amex your business.

On the other hand, if you’ve opened lots of Amex cards, but kept them and have continued to use at least some of them regularly, I’d think they’d be pretty happy with your business.

Somewhere in the middle are those who have kept some cards, but cancelled others.  In other words, most of us.

Going out on a limb here, I’m guessing that Amex will consider these factors:

  • Primary negative factor: Number of cards closed less than a year from opening.
  • Moderate negative factor: Number of cards closed one year after opening (e.g. closed in order to avoid second annual fee).
  • Primary positive factor: The extent to which you use Amex cards for regular spend, over time.
  • Moderate positive factor: Average age of your Amex cards.
  • Non-factor (I think): Number of times product changing from one card to another

Evaluating Risk

My credit card tracking spreadsheet shows that I’ve successfully signed up for 20 Amex cards over time.  Out of those 20 Amex cards, I’ve cancelled 11 of them: two were closed less than a year from opening; five were closed right at a year; and the rest were closed after more than a year.

Here are my still-open cards.  The first set of cards are used often:

  • Delta Platinum consumer card: Opened November 2009.  I’ve product changed this card many times between the Platinum and Reserve version of the card.  I use this card frequently for spend in order to earn high level elite status.
  • Delta Reserve business card: Not sure when opened (probably mid-2011). I’ve product changed this card many times between the Platinum and Reserve version of the card.  I use this card frequently for spend in order to earn high level elite status.
  • “Old” Blue Cash: Opened Jan 2014 for its 5% cash back at grocery stores and drug stores. No annual fee.
  • Hilton Ascend: This recently converted over from the Citibank Hilton Reserve card.  I won’t count this one in my risk analysis, but I did use it pretty regularly to earn a free night with $10K spend under the old Citi version of the card.
  • Amex Blue Business Plus: Opened June 2017.  No annual fee.  I use this one regularly to earn 2X everywhere.

These are rarely used for spend except with valuable Amex Offers:

  • Amex Everyday Credit Card: Opened June 2017. No annual fee.
  • Platinum Card for Schwab: Opened December 2017.  Will likely cancel when next annual fee hits.
  • Green Card: Opened December 2017.  Will cancel when next annual fee hits.
  • Ameriprise Gold: Opened December 2017.  Will cancel when next annual fee hits.
  • Business Platinum: Opened as a Business Gold card in June 2016.  Received upgrade offer to Platinum. Next annual fee will hit any day now so I’ll have to make a decision about this one soon.  I’ll probably downgrade it to a low-fee Business Green card and hope for another upgrade offer.

So, here’s my estimated risk profile:

  • Number of cards closed less than a year from opening: 2 (that doesn’t seem too bad)
  • Number of cards closed one year after opening: 5 (hopefully they’re not too worried about this metric)
  • Use Amex cards for regular spend, over time: Pretty good considering long time use of Delta cards
  • Average age of Amex cards: About half of my current cards were opened within the past year.  That’s not great.  On the other hand, it’s good that I haven’t yet closed them.  Plus, I have a couple of cards that have been open for 7 years or more.  Overall, I think Amex would see this as a positive.

Based on all of the above, my best guess is that I’m pretty safe to sign up for new Amex cards.  Yes I’ve signed up for more Amex cards than the average bear, but I don’t have a regular pattern of closing cards soon after receiving the bonus.  True, I will soon add two more cards to the “cancelled after a year” pile, but I don’t think that’s the primary thing that Amex is watching for.  It’s normal and expected to evaluate whether to keep a card when the next annual fee hits.

Bottom Line

My best guess is that the new terms primarily affect those who have a pattern of opening and quickly closing cards after earning the welcome bonus.  As shown above, it’s possible to evaluate your own Amex card history to get a sense of whether or not Amex is likely to enforce the “no bonus for you” rule.  Unfortunately, all of this requires guessing.  We don’t yet have any hard information to help understand this new “rule”.

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