American Express Membership Rewards - An AMEX Surpass Conundrum

All the recent developments regarding AMEX leave me with an interesting decision, and I’d like to get the views of all the credit card mavens out there. I hope no one will mind that I’m posting this on both the AMEX and Hilton boards to get maximum response.

First, our situation: My wife and I have been retired for 10 years or so, have what most would consider excellent retirement incomes, and we travel for pleasure a good amount. While we were working we each accumulated significant balances in various mileage programs, credit card points, etc. Now, with one of our kids an airline captain, airline miles mean little to us, so we decided some years ago on a strategy of concentrating our credit card points accumulation on hotels, and landed on Hilton HHonors. At the time we had a longstanding AMEX account that earned Delta miles, and they were happy to transfer the affinity to Hilton, drop the annual fee, and even let us keep the same account number to eliminate paperwork hassles with automatic charges. When we saw that we could transfer our American Airlines miles to HHonors points at a favorable exchange rate, we did that. We’ve been happily earning and using Hilton points ever since, always maintaining a respectable balance in the Hilton account, and maintaining our gold status based on AMEX spend.

We only have two credit cards: the Hilton AMEX and one bank card. They both currently have reasonably high credit lines, with the AMEX at $25k. Based on last year’s AMEX spend, our average monthly bill is about 16% of the line. We never, ever fail to pay this or any other bill absolutely in full, absolutely on time, with never a problem. Our credit score is significantly over 800. We have never paid a penny of interest on any credit card.

Now comes the Hilton Surpass card from AMEX, with a $75 annual fee, and the promise of Diamond status in the Hilton program. Therein lies our dilemma. Consider. . .

1. Some on these boards say that Hilton Diamond status will be granted instantly to anyone who upgrades to this card and who had more than $40,000 in spend in 2008, and we qualify on that front. Is this absolutely true? Has anyone had a contrary experience?

2. Some on these boards say that this card will materially weaken the value of Diamond status overall, because of the added number of people granted that status. Do you agree that it will make a major difference? If so, it seems to naturally follow that Gold status will be reduced to nearly no significance based on the pecking order. Do you believe this is so? Do you believe that Diamond status will soon be necessary to get any perks at all beyond those offered to “no status” members?

3. At the same time, some here and elsewhere are complaining that the service given to Diamond members has slipped alarmingly, causing some to move to other programs. Is it really awful, and are benefits being denied regularly because of poor customer service?

4. We cannot ignore the fact that many AMEX customers are having their credit lines reduced—in some cases to an alarming degree. On these and other boards we find horror stories of drastic slashes in credit lines, in some cases to the point where a $40k annual spend to maintain Diamond status would be impractical or literally impossible. AMEX seems to be all over the place in cutting these lines, citing everything from drops in real estate values, to unfavorable analyses of where you spend your money, to God knows what else. Has anyone who has applied for a Surpass card asked for a guarantee of no credit line cuts absent a failure to pay the bill? Or at least an agreement to let you revert to the standard no-fee Hilton card with a refund of the $75 if they do? After all, a card that requires a $40k spend to be valuable is of little use if the line is suddenly and arbitrarily slashed to $1k.

Bottom line: if you were us, would you go for the Surpass card or just stand pat? Appreciate your views.

Hi allga. First, I understand that cross-posting is v. much frowned upon on FT, so this thread may get deleted/moved any moment. I haven't had a look at the other thread you've started to see the responses, and likely, you will get much better answers re: Diamond dilution from the Hilton forum.

However, I am surprised and intrigued by a couple of comments you make. It sounds like you live fairly comfortably, have a decent income, and travel rather a lot. No matter what the dilution of Diamond status on Hilton, it will always be better than Gold, and given your travel patterns, would that not be worth $75/ year, especially since you seem to meet the the minimum spend required without a stretch?

If you swap your loyalty to another brand (say SPG), you will never get top tier status by spend alone, and since your stays seem to be redemptions only, again will never get top tier status. One can 'buy' RA status at ICH for several hundred dollars -- but since you seem averse to spending $75, not sure that is the way forward for you.

Re: your final point about credit limits etc. Who knows? If nothing has happened yet, that's good news. But I was Amex, and someone called me asking me to guarantee their credit limit, I would see that as a red flag, and immediately start a financial review on them!

All in all, it's a personal decision. I've spent $75 on a bad meal, and not just once. And it seems like you earn much more than me! I would go for the Surpass card without blinking.

tb

tb--

Thanks. It's not the $75, it just the hassle factor, which may not be an issue. I appreciate your perspectives on the alternatives (or lack of them). Rereading my post, I can see how you would think the $75 was the issue when it really isn't. If they dump my limit to the point where the Surpass is no longer valuable, I'd either revert to the regular card (with or without the refund), or just dump AMEX and mark them down as fools.

If you already hold the HHilton Amex, upgrading to the Surpass (I believe, from the long thread in the Amex forum) is not a new application, so existing credit limits etc. will apply.

tb

What you read on internet bulletin boards are not testimonials from "typical" customers, you should never make the mistake of equating a "typical" Flyertalker to a company's "typical" customer. (there are other corllaries of this principle, in particular that those who claim to be a company's "best" customer on Flyertalk are usually in fact one of their "worst".)

To address a few things specifically you mentioned based on this:

We only have two credit cards: the Hilton AMEX and one bank card. This right here makes you extremely atypical, not just among FT'ers, but among Americans in general.

1. Some on these boards say that Hilton Diamond status will be granted instantly to anyone who upgrades to this card and who had more than $40,000 in spend in 2008, and we qualify on that front. Is this absolutely true? Has anyone had a contrary experience?Whether you qualify now or later, does it matter that much, you know it will be coming at worst after you spend $40k this year, but maybe you'll get it sooner. It seems like a good deal either way, and if you get it sooner, that just makes it a better deal.

2. Some on these boards say that this card will materially weaken the value of Diamond status overall, because of the added number of people granted that status. Do you agree that it will make a major difference? I don't think there are that many people out there who will be putting $40,000 of spending on this credit card. This is a case where the average FT'er is not representative of the average customer, $40k/year is a huge amount of credit card spending and is not typical. Even here on FT I would safely say that the HHonors AMEX is still a distant second in popularity to the AMEX SPG card.

3. At the same time, some here and elsewhere are complaining that the service given to Diamond members has slipped alarmingly, causing some to move to other programs. Is it really awful, and are benefits being denied regularly because of poor customer service?Quite simply, no, it's not that awful. In fact, the biggest complaints I've seen are about the telephone customer service, not necessarilly the benefits received at hotels (not that they don't exist of course).

4. We cannot ignore the fact that many AMEX customers are having their credit lines reduced—in some cases to an alarming degree. On these and other boards we find horror stories of drastic slashes in credit lines, in some cases to the point where a $40k annual spend to maintain Diamond status would be impractical or literally impossible. AMEX seems to be all over the place in cutting these lines, citing everything from drops in real estate values, to unfavorable analyses of where you spend your money, to God knows what else. Has anyone who has applied for a Surpass card asked for a guarantee of no credit line cuts absent a failure to pay the bill? Or at least an agreement to let you revert to the standard no-fee Hilton card with a refund of the $75 if they do? After all, a card that requires a $40k spend to be valuable is of little use if the line is suddenly and arbitrarily slashed to $1k.
Going back to my comment that your credit profile is very atypical, when it comes to risk of having your credit line reduced, that is a good thing I believe. I believe one of the primary reasons many folks have had their AMEX credit lines cut is having too much available credit, from both AMEX and other creditors. That is not the case for you. Regardless, I don't think switching from the standard card to the Surpass card will increase the chances of having your credit line cut.

One final comment, I believe you will receive a point bonus for getting the Surpass card, offsetting the annual fee for the first year to a great extent, if not completely. Given this, you really have nothing to lose trying it out for a bit, and you can switch back next time your annual fee is due.

Beckles--

Thanks so much for your thoughtful and valuable reply.

I did have to smile at your reference to "best" customers. With a whipsawed economy, on top of a history of intentionally overextending credit in hopes of generating high interest payments and penalties, combined with turning the English language on its ear and calling those who pay in full each month "deadbeats," it's harder than ever to tell a credit card company's "best" customers without a scorecard.

What seems clear is that AMEX, and possibly other cards as well, are frantically working to reverse their past sins and reduce their overall risk. The word "risk" is now back in fashion after having been ignored for so long by everone from mortgage brokers to banks and credit card outfits. Inevitably, in trying change course in panic mode, AMEX will overshoot the mark, act arbitrarily to some degree (a sure sign of panic) and alientate at least some of their truly "best" customers.

It's the job of the savvy customer to continue to play these guys like violins to the extent possible, and I think your response makes good sense in that regard. Appreciate it.

allga, just wanted to say that your posts are among the clearest, most comprehensive and thoughtful that I have seen lately on FT. It's a pleasure to read inquiries such as yours and it makes it much easier for other FTers to give relevant and focused answers. Makes one want to think as carefully about the responses as you did about the inquiry.

Upgrader--

Many thanks for the nice words. Much appreciated.

The word "risk" is now back in fashion after having been ignored for so long by everone from mortgage brokers to banks and credit card outfits.


And lets not forget the consumers who took "risk" as well.
Buy now, Pay latter.

Wasn't Trump who said bankruptcy was a one of his greatest business decisions. Nice.

Couldn't agree with you more Allga

g50--

Good catch. You're absolutely right that naive and/or greedy consumers should be featured prominently in the "Risk Hall of Shame."

Setting aside those who got squeezed by catastrophic medical needs and the like, those who paid slowly on maxed-out cards, then got more cards to raise their credit limit, contributed in their own way to the crisis as much as Wall Street, the banks, AIG and all the "Bernies."

This card is a total joke. My wife and I are both Centurions with seven figure spending per year and we were both turned down for the card. We do not have excessive credit card debt and I make over $250k per year. What the heck is Amex trying to do.....go out of business!?!?!

Centurion has sucked for the past couple years but us "die hards" hold on for hope of some real benefits again someday. I am about through with this company and their ridiculous business model.

Jerry

allga, just wanted to say that your posts are among the clearest, most comprehensive and thoughtful that I have seen lately on FT. It's a pleasure to read inquiries such as yours and it makes it much easier for other FTers to give relevant and focused answers. Makes one want to think as carefully about the responses as you did about the inquiry.

+1....and Beckles with his excellent response. Such a great retirement picture, the one blemish being your choice of hotel program.

We cannot ignore the fact that many AMEX customers are having their credit lines reduced—in some cases to an alarming degree. On these and other boards we find horror stories of drastic slashes in credit lines... AMEX seems to be all over the place in cutting these lines, citing everything from drops in real estate values, to unfavorable analyses of where you spend your money, to God knows what else.

...when it comes to risk of having your credit line reduced, that is a good thing I believe. I believe one of the primary reasons many folks have had their AMEX credit lines cut is having too much available credit, from both AMEX and other creditors. That is not the case for you. Regardless, I don't think switching from the standard card to the Surpass card will increase the chances of having your credit line cut.

One of the problems with Amex' current frantic line-reduction and account-cancellation campaigns is that a bunch of innocent people are apparently getting caught in the crossfire. The targeting decisions are obviously made via algorithms, not human reviewers. So a certain amount of irrational decisions emerge and cardholders with profiles similiar to the OP's have been virtually shut down. While Beckles is right that some targets had entirely too much credit, others have worked hard, played by the rules, never paid late, etc. and been cut off at the knees.

(The really galling part is that Amex encouraged many of those small-business cardholders to make Amex cards their sole credit resource, promising flexibility and partnership, etc., and now have cut them back to $1,500 / month lines, which not only makes Amex useless but does grievous damage to the businesses involved, because it's harder than usual right now to go out and get new credit facilities. For this reason alone I would never make Amex an integral part of my business cash/credit management. Incredibly, while this wholesale pullback is going on, I still receive a stream of DM pleading with me to open new Amex platinum or plum accounts -- all of which get torn up. Why would I risk it?)

So -- just because the OP has a sterling record doesn't mean Amex will remain useful to him. I do not think Amex is operating entirely rationally right now, any more than it was a while ago, when it was approving cards and credit lines for babies and puppies.