Originally Posted by lkar

Whenever I see a deal that people are hoping on in a big way, I always assume that it's not sustainable in the long run. For example, the Club Carlson second night free on points redemptions for credit card holders. I remember thinking, holy crap, that's not sustainable. The only surprise was that it lasted as long as it did.

I kind of felt the same way about 50 percent points back. My premise is that when Amex pays for MR points redemptions, they haven't been paying anything close to 2 cents per point. I have no inside knowledge, but my guess is that when they have to buy points for mileage transfers, they pay far less than that to the airlines whose points they buy. Similarly, redemptions directly through Amex have always been for less than that, whether for gift cards, charity redemptions, or other travel.

The problem with 50 percent points back for Amex is that it applies not just to points earned on the business cards, but to the entire points balance in the customer's account, whether generated with 1.5x on Everyday, 5x on Platinum, 3x on Gold, or some of the great blue business bonuses they have offered, etc.

My guess is that Amex never expected they were going to have to start paying 2 cents per point for massive numbers of accumulated points. Perhaps they thought their experience with the 30 percent points back would be translatable to 50 percent and they envisioned it as merely a niche redemption option. Or maybe they thought the airline of choice limit or their traditional experience with first class purchases would be a guideline, but that was likely a miscalculation. They probably didn't expect that 2 cents per point would be something of a magic threshold, given that so many people value their flexible points around that range and the opportunity to earn miles on top for the purchased flights has created a critical mass. There also is a bit of a perfect storm here, in that many airlines are really ratcheting back on mileage redemptions, while decreasing the cash price of premium cabins, making purchased tickets more attractive.

Bottom line is that I'm guessing Amex is somewhat blindsided here. I don't necessarily think this is in the same league as coins, pudding or Club Carlson, but if I were guessing I wouldn't be surprised if they don't have the budget for large numbers of redemptions at 2 cents per point. I'm concerned that increasing the rebate time is just the tip of the iceberg. I think they are going to need to find other ways to slow this ship, and I am as pessimistic about the future of this opportunity as I was about Club Carlson. I just hope it lingers as long before we have to move on to the next thing.