Originally Posted by
bmabnorth
I don't think reason 2 applies. Typically (not sure about Amex for foreign currency) you get charged at interbank rate and then the %2.5 fee is tacked on. That's how MasterCard has always charged me. So you are paying essentially %2.5 for the points.
I should have clarified: the 1.6% assumption was the approximate fee you would have to pay if you were converting CAD to USD yourself and transferring funds to a US bank account.