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Sunday Reader Question: How to Keep Amex Points While Avoiding an Annual Fee

by on July 8, 2012 · 14 comments

in American Express, Sunday Reader Questions

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TPG reader Andrew wrote in this week:

“I was wondering whether you could help me with an Amex issue…specifically what to do with my Amex Membership Reward points. I currently have a Premier Rewards Gold Card and the annual membership fee is due in August 2012. I’m currently in between jobs, so I am trying to avoid paying the $175 fee. However, I do want to retain my Membership Reward points. If I cancel my Premier Rewards Gold card, I will lose my points unless I do one of the following:

1. Downgrade to a new charge card (i.e. Gold or Green).

2. Apply for a free Blue card. In both instances, I can transfer my points to the new card.

If I go with option 1, I will have to pay a fee ($95+), something that I’m trying to avoid. If I go with option 2, I will not be able to transfer my points to a frequent flier or hotel rewards program, which is obviously something I will want to do. If I knew where I needed the points, I would transfer them right now and just cancel the card outright. But at this point, I’m not sure where to transfer them since I’m not planning and trips in the near future.

Any suggestions would be greatly appreciated on how to resolve my issue!”

With Amex points, you can’t have your cake (no fee) and eat it (transfer to Membership Rewards partners) too. However, if you downgrade to a Blue card, you can continue to earn 1 point per dollar spent (two with Amex travel).

Your points will be safe and then when you have enough to transfer to a partner, you can see if there are any offers for Premier Rewards Gold, Gold, or Platinum that have the first year annual fee waived. If not, you can always renew your annual fee and if you decide to cancel the card, Amex will give a prorated refund of the fee you paid.

Risks
If you downgrade to a Gold or Green card, it may exclude you from any Gold card bonuses in the future. Generally Amex will let you downgrade, but they won’t incentivize you by giving you a sign-up bonus when going to a lower level card. Granted, the Gold card sign-up bonus right now is a whopping 0 points anyway, but if in the future that increases, you may be ineligible if you already have/had the card.

Another risk is incurring a potential credit pull and not getting anything back (like a sign-up bonus) for that pull. If you upgrade/downgrade between charge cards a charge card (pay in full), like the Premier Rewards Gold, to a personal credit card (ability to pay over time), like the Blue card, it’s possible Amex will initiate a hard credit inquiry since there is more risk involved with having a credit card. However, you should still keep the same “Member Since” date and online login information, though your Membership Rewards points will become Membership Rewards Express points, good for only cash back/merchandise at about 1 cent per point or less. If you were then to get the Premier Rewards Gold, Gold or Green card in the future, your Membership Rewards points would then be good for transfers to Membership Rewards’ transfer partners again.

A Different Option
If you don’t want to pay the $175 annual fee you can always call and explain your situation and see if they will waive the annual fee or give you a points bonus that might be worth even more than the fee. It never hurts to ask!

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • emily

    i had this same debate with myself two months ago. i ended up calling and asking straight out if i could have a retention bonus. i was offered a choice of a $50 credit and then another $50 if i spent $500 in sixty days OR 7500 points and then another 5000 if i spent $500 in sixty days. i obviously took the points.

    they explicitly told me that the bonus was based on me using the the card a lot. i spent $7000 on it in the year, which i didn’t know qualified as “a lot” but apparently it does. or the rep was inventing things, which is equally possible. in any case i was much happier to pay the $175 when i was getting 12.5k points out of it.

  • PJ

    IS this the Gold Premier Reward card on 75K MR promotion last summer ?

    I have been trasnferring MRs into Aeroplan to fly on United which has very good availability for its Staralliance parters with 1:1 ratio.. regretted I did not do more than 21K when there was a 20% bonus going on.

  • emily

    yep, it was the PRG for 75k.

  • Pssteve

    Great timing for this post.
    Emily: Did you call before or after the charge was posted on your statement?

  • Andrés Catalán

    Downgrade to Amex Zync: $25/year and upgrade when better times come.
    You avoid the credit pull.

    Downside, the perks are a pale subset of those of the Amex Green: 1 point = 0.75 cents when paying with points in their Amex Travel website. And I think you need to buy a “package” to be able to transfer points.

    BTW, how come I have never seen you writing about the Zync?

  • StM

    Basically the way I understand it, is that you cannot downgrade a PRG to a fee free card. This is because the only fee free card is the Amex Blue which is a credit and not a charge card. So if you went credit route it’s app, take the credit hit, and get a Blue. Otherwise, it’s $25 for Zync.

    So – what are the equivalent options for the Business Gold Charge for those of us that did the 100K bump offer last year?

    Also, does the Zync have different card #’s for authorized users too?

  • Leehonolulu

    I applied for both PRG and Business Gold at the same time in August 2011. If I kept Business Gold, my Amex points should be safe, right?
    I rather be paying for Business Gold ($125) than PRG ($175)
    I also applied for both SPG personal and business….I know a lot of folks like it but I am trying to cut down annual fees. I don’t think these cards give you one free night when you pay for the annual fee (like Marriott or IHG). Also, no cardholder point discount when redeeming…am I right?

  • PJ

    If I fly United a lot and was happy to transfer all miles into CO before sep 30,2011 .To avoid the immient annual fees on Gold Premier Rewards 5 @175 ,what is the downside for transferring all amex remaining MRs into my solo aeroplan account since I am an AU on all other 4 cards and also THE account manager?

  • RJ

    A similar query :- I have a corporate AMEX at my current job. I personally pay the 75$ annual MR fee for the rewards program every year. I am leaving this job in the next few weeks. When they cancel my AMEX card, would my MR points be annulled as well, even though I paid the latest annual MR fee in May 2012

  • http://Twitter.com/AbbiV AbbiV

    If you want to keep the flexibility of a full fledged MR account and avoid downgrading your card, another option may be to use MR points to pay the annual fee :-/ It’ll only cost you 17,500 miles O:-)

  • PRS12

    I also have the Premier Rewards Gold with membership fee due for the first time in August 2012. However in June I just applied for and received the Business Amex Gold based on the recent promotion offering 75k points and waived first year fee that has since ended. My plan is to cancel the personal Gold before the fee is due in August and instead use the Business Gold for the next year. I won’t get the grocery spending bonus but otherwise can’t see any other downside. Am I missing anything with this plan?

  • Ajtopps

    Emily I like your style! I’m going to remeber to inquire about a retention bonus next year when my membership fee comes due.

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  • emily

    just stumbled on this post trying to figure out what to do this year :) last year, i called after the charge was posted. this year i did too, but they said they won’t give me anything even though i spent the same amount and can’t downgrade me to anything either. guess i will have to cancel unfortunately.

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