I was going through my credit cards portfolio and I was debating whether to keep the American Express Gold Rewards Card beyond the first year. My initial thought was to cancel as I get closer to the renewal date because the $150 annual fee is quite steep. But with the possibility of American Express clamping down on churning credit cards, I decided to give this a closer look. Here are the highlights of the credit card:
- $150 annual fee (waived the first year)
- Earn 25,000 points when you spend $500 in the first 3 months
- Earn 10,000 points for each approved referral
- Earn 2 points for every $1 spent on eligible travel (flights, hotels, car rentals, cruises, etc.) purchases, as well as gas, groceries and drug stores.
- Earn 1 point for every $1 spent on all other purchases.
What makes Membership Rewards valuable is its flexibility to transfer points to other loyalty partners. You will need to have a credit card that earns you Membership Rewards to keep your balance active. Otherwise we lose all our points. I like having the ability to transfer my points to the program of my choice at the time that I will need the points. Until then, it is best to keep the points in a transferable format until we know which program we need the points for.
Earning 2 points per dollar on specific spend categories makes this credit card very valuable because 1 point can potentially get you more than 2% in value, depending on how you leverage your points. Therefore, 2 points per $1 spent can return you around 4% in value.
The travel expenses include a wide variety of travel services or travel bookings including air, water, rail and road transport, lodging and tour operator sales but not including local and commuter transportation. If you can take advantage of all the categories that give you 2 points per $1 spent, you can add up your points in a hurry.
If you can get a few referral bonuses a year, the $150 will easily be covered. However, there are rumours that the referral bonuses might eventually be cancelled so I will be watching the news very closely.
Message to American Express: If the ability to churn and/or the referral bonus program gets cancelled, then I hope to see some different incentives to retain the credit card to be added.
A few perks that I am hoping to see is to reward higher spending cardholders by waiving the annual fee and/or bonus points if we meet a minimum annual spend requirement.