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Today, TPG Senior Points & Miles Correspondent Nick Ewen explains why updates to one Membership Rewards card might make you rethink your travel credit card strategy.
Happy June! For many TPG readers, summer vacation plans are fast approaching (if they haven’t already arrived) and you’re hopefully evaluating your credit card portfolio to make sure you’re maximizing your points and miles. I want to take this opportunity to remind you all of some changes that kick in today on one of the more popular travel rewards cards: the Premier Rewards Gold Card from American Express. In this post, I’ll look at whether the new and improved benefits should earn this card a spot in your wallet.
Let’s start with a quick overview of the key changes:
- 2x Membership Rewards points on dining — The card previously offered just a single point per dollar spent at US restaurants; offering double points brings it in line with competitors like the Citi Premier Card and Chase Sapphire Preferred Card. You’ll still earn 3x points on airfare booked directly with airlines and 2x points on purchases at US gas stations and US supermarkets, but adding dining as a bonus category is a nice change.
- No foreign transaction fees — Surprisingly enough, this card has long carried a 2.7% foreign transaction fee. Given the relatively high annual fee (more on that in a second), this seemed like a strange gap in the card’s benefits. Fortunately American Express has recognized how many other competing cards already waive these fees, and will no longer apply them on purchases made in foreign currencies.
- $100 airline fee credit: The third big change to the card is the implementation of a $100 yearly airline fee credit, which will likely be similar to that offered by the American Express Platinum Card. This can be used toward a variety of airline charges such as checked bag fees and in-flight purchases; many reports indicate that airline gift cards are also eligible for reimbursement. You can register for a qualifying airline here.
- New $195 annual fee (up from $175): Of course these changes don’t come for free, so the card’s annual fee will increase by $20 to $195. While the increase is easily offset by the new airline fee credit, it’s an interesting decision in light of Citibank recently lowering the annual fee and changing its own bonus categories on the Citi Premier card.
Clearly these changes are improvements to the card; I’m honestly surprised that it took this long for American Express to start waiving foreign transaction fees for such a premium product! Adding dining purchases to the 2x category bonus is a great update, and raises your “return” on restaurant spending to 4% (based on TPG’s most recent valuations of Membership Rewards points). This is still just behind the Sapphire Preferred (4.2%), but it opens up a lot more worthy redemption options through the program’s various transfer partners.
The airline fee credit is another solid addition to the card (assuming it works like the credit offered on the Platinum card). A single round-trip with two checked bags can save you well over $100, and if you can apply the credit to an airline gift card, then you shouldn’t have any problem taking advantage of it every year. I just wish it covered airfare like the one offered by the Citi Prestige Card.
These changes have clearly caused some TPG readers to begin reassessing which cards they keep in their wallets, with some debating between the Platinum and PRG cards and others trying to decide between the PRG, Sapphire Preferred and Starwood Preferred Guest® Credit Card from American Express. In many cases, this isn’t an either/or decision, but rather a chance to evaluate how to best use multiple cards.
However, to make the decision a bit easier, my colleague Jason Steele has undertaken a detailed analysis of the Premier Rewards Gold card in comparison to both the Chase Sapphire Preferred and Citi Premier, which many consider to be the PRG card’s two biggest competitors. He gave the slight edge to the Sapphire Preferred, though your spending patterns may differ.
To me, the new benefits on the Premier Rewards Gold card make it an attractive product if one or more of the following apply to you:
- You spend a lot on airfare
- You incur some incidental airline fees each year
- You don’t travel enough to justify the benefits (and annual fee) of the Platinum card
- You want to earn Membership Rewards points on your primary card
That last one is critical, since the PRG card offers significantly higher earning potential than other Membership Rewards cards thanks to the bonuses on airfare, gas, groceries and now dining. It’ll be interesting to see if the gas and groceries categories will expand to include non-US locations now that the card waives foreign transaction fees. Either way, it’s nice to see a card improve its benefits to make it more attractive for consumers.
How are these changes making you rethink your rewards card strategy?