New Language Offers A Warning For Churning American Express Cards
Yesterday we learned of some new language being included in the footnotes of applications for anyone considering churning American Express Cards (in The United States only). One Mile At A Time reported that Amex has introduced a vague new footnote, indicating that American Express may, at their sole discretion, choose not to award a welcome bonus, and they may consider how many cards a consumer has opened and closed when determining eligibility:
What Does This Mean For Canadians? Well, nothing really. To be honest, I think it was completely within American Express’ rights to withhold welcome bonuses from anyone they determined was ‘gaming’ the system before this warning. I think this new language is largely their legal team insisting it’s mentioned, and not so much a change in policy. Until we see this footnote included in our Canadian applications, I would say it’s business as usual!
The Rewards Abuse Team (RAT)
It’s been rumoured for a while that American Express has a dedicated group of employees tasked with finding cardmembers who abuse the system. What does that look like in practice? Well it could be anything from finding chronic manufactured spenders, to repeat churners, to people participating in return fraud. It has never been confirmed that this team actually exists, though the timing of the rumours seem to align well with increased reports of financial reviews, Membership Reward points being clawed back, or accounts being frozen/closed.
As far as I know, the RAT is only applicable to American consumers, as Amex Canada is a completely different operation. I’ve only heard of a few people getting financial reviews in Canada, and I believe they were triggered more due to unusual spending (think 5 figures in the first week of opening a new card), and Amex probably just wanted to ensure these people could actually pay their bills, or weren’t engaging in something illegal.
Is Churning American Express Cards Still Alive In Canada?
Absolutely yes! We saw a change to our own footnotes about a year later than our American counterparts regarding eligibility for repeat welcome bonuses, which added a sentence saying any previous cardmembers may be approved, but would not be eligible for a welcome bonus.
How did this translate? It didn’t, as far as I can tell. I believe it has been about two years since this footnote was introduced, and by all accounts Membership Reward cards are still eligible for repeat welcome bonuses. Best of all, this language isn’t even included on small business card applications, so repeat welcome bonuses likely still have a bright future on products such as The Business Gold Rewards Card and The Business Platinum Card!
I did have a recent scare, however, and the timing couldn’t have been better! I had just started writing this post talking about the new warning for churning American Express cards in The States, when I logged into my Membership Rewards account and noticed the welcome bonus on my new Platinum Card (not my first one) had been clawed back!
GASP!!! My world as I knew it was crumbling. Once I settled down and took a deep breath, I looked a bit closer and realized the refund from The Four Seasons Whistler had actually brought my total spending below the $3,000 threshold for the welcome bonus, and the small purchases since the refund still didn’t have me over the mark. Phew…
Here’s hoping when I cross back over 3K the points post automatically because I can almost guarantee a call to Amex for a closer look will result in them saying ‘It appears you’ve had this card before – that’s why the points were clawed back‘.
Churning American Express Cards Responsibly
While there’s no hard and fast rule on how you should churn American Express Cards, I can share my own practices, which have yet to be flagged as inappropriate by the RAT (if they exist here), or disqualify me for a repeat welcome bonus.
Moderation Is Key!
I get an email every other day asking how often a card should be churned. 3 months? 6 months? 10 years? It all depends on your comfort level, though personally, I follow either a 6/6 rule or, even more conservatively, a 12/6 rule.
Basically, I keep the card open for 6 or 12 months (cancelling before the annual fee posts, or just after, as I suspect requesting refunds all the time would trigger a closer look at your account). Then, once the card has been cancelled for at least 6 months, I reapply. The reason I say at least is that I generally plan applications around large purchases to help ease the burden of meeting minimum spends. I don’t manufacture spend, so I’d rather wait an extra two months if needed to ensure I can reach any spending requirement organically.
Don’t Forget To Use The Card
Customer acquisition is expensive, and I truly believe Amex is good to their profitable customers, and not so good to those who cost them money. If you open a Platinum Card every 3 months and cancel after hitting the minimum spend, you’re not a very good customer. Heck, even the welcome package Amex sends out with those cards must cost a small fortune, so throw them a bone and put some spend on the card!
When American Express offers Membership Reward points to a new customer, they expect to get the cost back over time in processing fees. If you never use the card outside of meeting minimum spends, you’re not likely going to have a good outcome if you ever get under their microscope.
Don’t Do Anything Illegal
Manufactured spending is a controversial topic. Personally, I don’t engage, as I just don’t see the benefit given the time commitment (though maybe I don’t know the lucrative methods).
Funny story though: I once bought a TV at Costco online using a Visa card, had immediate buyers remorse, and decided to return the unit when it arrived a few days later. When I brought it back to the store, my jaw almost hit the ground when the friendly staff member said ‘oh sorry, you bought this online with your Visa, but we don’t process that in-store. I’ll have to refund you cash. I’m sorry for the inconvenience’.
The travel hacker in me was doing cartwheels thinking of all of the diamond rings I could buy at Costco for free Aeroplan miles, but then the responsible, boring side of me considered that unethical, if not fraudulent, and decided it was a path I wouldn’t walk (as an aside, I love Costco’s return policy for legitimate cases, and would hate to see it changed because people were abusing the system).
New Warning For Churning American Express Cards Bottom Line
Personally, I think this new language is a whole lot of nothing. It’s legalese for ‘we can do whatever we want regarding welcome bonuses’, which I believe has always been the case anyway.
We’ve seen new language before indicating changes to welcome bonuses, though in practice we haven’t really seen it enforced. So until I hear otherwise, I think it’s business as usual, especially in Canada where we haven’t seen this new warning for churners.
If you’re only cautiously optimistic that the end isn’t near, considering applying for a couple of cards now to boost your points!
Apply for The American Express Platinum Card and earn 50,000 Membership Reward points as a welcome bonus, in addition to a $200 travel credit!
Apply for The American Express Business Gold Rewards Card and earn 30,000 Membership Reward points!
What are your thoughts on the new language for American consumers? Do you think we could see impacting Canadian cardmembers?