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11 May 2019

American Express cuts credit card reward bonuses and refer-a-friend points

You'll need to spend more to unlock rewards like free flights

American Express has drastically reduced the number of bonus points available to new customers and scaled back its bonuses for referrals to friends and family.

American Express reward credit cards allow you to earn Membership Reward Points that can be used for a variety of point schemes, including British Airways Avios and Virgin Atlantic Flying Club Miles.

The changes mean new and existing cardholders trying to earn enough points for a free flight or hotel stay will have to spend much more.

Here we explain what you need to know about the shake-up and highlight the best reward credit cards on the market right now.

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How have the Amex cards changed?

American Express has increased the minimum that new customers must spend to unlock introductory points - even while the size of the bonus has shrunk.

The American Express Preferred Rewards Gold Card, which charges a £140 annual fee, now offers 10,000 membership reward points when you spend £3,000 in the first three months of opening the account.

Previously you could earn 20,000 (enough for a free flight on the Avios scheme) when you spent £2,000 on the card within three months.

The fee-freeAmerican Express Rewards Credit Card now offers 5,000 points, instead of 10,000, while the amount you need to spend within the first three months has doubled from £1,000 to £2,000.

But it's not just new customers that will suffer from the changes.

The American Express Platinum Reward Card, which charges a £450 annual fee, has reduced the number of points customers can earn for referring a friend by a third, from 18,000 to 12,000.

A similar change has been applied to the American Express Preferred Rewards Gold Card, with the referral bonus dropping from 9,000 to 6,000.

Why are Amex rewards being curbed?

An American Express spokesperson told Which? Money: 'We regularly review our welcome offers and refer-a-friend bonuses on our cards... when making these changes, our aim was to ensure that we remain competitive and continue to reward both new and existing card members for their spending.'

A number of reward credit card deals have been scaled back after the EU cap on interchange fees was introduced in 2015. The cap limits the amount Visa and Mastercard could charge businesses for accepting debit and credit card payments.

However, American Express is exempt from the EU interchange fee cap rules, as it operates a three-party scheme (between Amex, the retailer, and the customer) rather than a four-party scheme (Visa/Mastercard, the bank, the retailer, and the customer).

That said, a ruling last year by the Payments Systems Regulator confirmed that the firm's branded deals, including the British Airways American Express, would no longer be exempt from the rules as they effectively operate a four-party scheme. It's possible this decision could end up affecting its main range of cards.

As well as reducing rewards, Amex has previously closed a loophole that allowed customers to earn its introductory bonus, close the account and open a new card six months later to earn the bonus again. Now, new customers must not have had an Amex card in the last 24 months to qualify for the bonus on its deals.

Best airline reward credit cards

While the changes to the Amex reward credit cards are significant, the offer is still competitive compared with other reward credit card deals.

However, if you're after an introductory bonus with a lower minimum spend, try the British Airways American Express Credit Card.

The deal is fee-free and offers 5,000 Avios when you spend £1,000 within the first three months. You can also collect one Avios for every £1 spent. If you spend £20,000 in a year, you'll also get a complimentary companion voucher.

Alternatively, the Virgin Atlantic Reward Credit Card can help you boost your Virgin Atlantic Flying Club Miles. You can earn 5,000 bonus miles with your first card purchase, plus an extra 7,000 miles when you spend £1,000 within 90 days of opening the account.

You can compare more airline reward credit cards using Which? Money Compare.