How the Membership Rewards Program Can Redeem Itself
Ariana Arghandewal September 23, 2017
The American Express Membership Rewards program has been on a steady downhill climb. While programs like Chase Ultimate Rewards and Citi ThankYou have added valuable transfer partners, Membership Rewards has either lost them or experienced devaluations-by-association. First, Continental Airlines ceased its transfer partnership in 2011, then Delta began a series of (seemingly never-ending) devaluations, and even Singapore KrisFlyer has jumped on the bandwagon.
Chase is set to overtake American Express in the premium credit card market and Citi is getting competitive with the Prestige card. With a one-per-lifetime credit card bonus policy and a questionable move meant to enhance their Platinum Card, American Express needs to do a better job of catering to what their cardholders really want: Better transfer partners and more relevant card benefits.
Before I get into my grievances, I want to acknowledge that American Express does several things right. For starters, they have some of the best purchase and travel protections of any card issuer. Their Membership Rewards-earning credit cards not only have fairly generous sign-up bonuses (public and targeted), but their category bonuses are also some of the best out there.
Not to mention, the travel perks offered by the Amex Platinum cards pretty much set the trend that Chase and Citi expanded on with their premium credit card line-ups. The problem is that while Chase and Citi have upped the ante, Amex has sat back and done little to stay competitive.
The biggest problem with the Membership Rewards program is the lack of decent transfer partners. To stay competitive, Amex needs to add at least one domestic airline rewards program that isn’t Delta SkyMiles. Since losing Continental Airlines back in 2011 (which was doomed anyway), they have done little to acquire another domestic transfer partner.
Virgin America? The 2:1 transfer ratio is absurd and makes it difficult to justify transferring points in most scenarios. The absolute best thing Amex can do to rectify this situation is to add Alaska Airlines as a transfer partner. Not only are they a growing airline with their acquisition of Virgin America, they also have extensive partnerships with domestic and international carriers, giving their members the opportunity to redeem miles to virtually any place in the world.
Some of you might wonder whether a Membership Rewards – Alaska MileagePlan partnership might lead to a devaluation. Considering Amex’s restrictions around credit card sign-up bonuses and manufactured spending, I don’t think Alaska MileagePlan would be in danger of the same abuses that may have contributed to United and Delta’s devaluations.
When miles are too easily accumulated, airlines tend to devalue them. I don’t see that becoming a major problem for Alaska Airlines, considering Amex’s policies around restricting activities by “gamers.” Including Alaska as a transfer partner would be a huge boost to the Membership Rewards program, giving it a substantial advantage over Citi ThankYou and even Chase Ultimate Rewards.
There are other smaller things Amex can do to make their Membership Rewards program more competitive. For starters, they need to lower the annual fee on their Platinum Card. I suspect by increasing it to $550 Amex was trying to distinguish the card from competitors like the Chase Sapphire Reserve and Citi Prestige.
Not only was it a bad move to increase the annual fee by $100 but a lot of members do not appreciate the addition of $200 annual Uber credit. Or the restrictions around the annual $200 airline fee credit. Amex needs to do away with the requirement of choosing an airline and redeeming credits with that one only. In fact, allow cardholders to redeem their $200 credit towards any travel purchase, like the Chase Sapphire Reserve does.
To improve its Membership Rewards program, American Express needs to include more desirable transfer partners that don’t impose fuel surcharges or high redemption rates. Alaska MileagePlan would be the perfect fit for this.
Doing away with unpopular card features and lowering the annual fee on their premium Platinum card is another way they’ll get back into cardholders’ good graces. That’s my two cents on the topic. What do you think Amex can do to improve their rewards program?
i thought the changes to IAP was pretty impressive. It is now an actual benefit that I use consistently. I've never had a problem with their transfer partners. They've really stepped up with the 5x airlines, and 5x hotels when booking on Amex Travel. I would really like them to expand the 5x on hotels for hotels booked on FHR, and direct on the hotel websites. Other than that, I am really happy with my Amex Platinum.
Excellent assessment and comments, thank you. In my opinion the leadership of American Express achieved lunacy when they did something (or something was done to them), such that the Marriott Rewards program was dropped. Membership Rewards needs Marriott back. Starwood Preferred Guest is not a viable alternative, as the transfer ratio is, as you say, absurd. In addition to Marriott Rewards, I believe American Express needs to add American Airlines to Membership Rewards, as well. At this point, I believe that the Membership Rewards program is one of American Express' greatest liabilities.
But at least Amex Membership Rewards has one domestic legacy airlines partner in Delta. Citi Thank You points (which is what the Ctii Prestige earns) has none! All it has is JetBlue, plus a bunch of foreign airlines, most of which have horrid "hard" expiration policies (ie, you cannot defer expiration of your miles once you transfer there). So while Chase may have a better selection of domestic transfer partners, I don't get your point of comparing Amex Membership Rewards to Citi Thank You Points and then focusing on transfer partners. Transfer partners is where Citi TYP is the WEAKEST. Gosh, even though Citi is one of AA's two credit card providers, Citi and AA couldn't reach an agreement on TYP, and so TYP points can't be transferred to AA, even though the same bank issues AA credit cards!!! And at least Amex supports transfers to several hotel programs, even if it at not-so-great transfer ratios. Chase supports several hotel programs too. But Citi TYP, only one, Hilton Honors.
Having AS as a transfer partner would be a big step up but what keeps me from going to the Amex Platinum from the PRG is the dining 2x points rate vs 1x with the Platinum. My current spending habits between dining and airfare make the 2x & 3x MR points earning rates of the PRG far more appealing when compared to the 1x & 5x MR earning rates of the Platinum. This would also compete with the Chase cards in earnings. I have lounge access via lounge club from a professionals group membership so it's just not worth it for me to pay the $550 annual fee without increased earning rates. An Amex Platinum with $550 annual fee, Priority Pass Select, $200 annual Uber, $200 any airline expense with 5x airline/hotel, 2x (or even better 3x) earning on dining/grocery and 1x on all other purchases would win me over.
AS would be a great benefit. We would be thrilled.