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American Express Reduces Welcome Bonuses on Some Cards: Are They Still Valuable?
American Express has lowered the welcome bonus on three of its rewards credit cards this week, a move that doesn't impact existing cardholders but makes the cards less attractive to those considering applying for a new Amex. Should you still apply for a Preferred Rewards card? We explore the value of each card now and explore other options in the marketplace.
Changes to Amex Welcome Bonuses
The welcome bonuses have been halved on three of American Express's Preferred Rewards credit cards; in addition, the amount you're required to spend in the first three months of card ownership has increased, making the welcome bonuses harder to earn.
For example, the Amex Preferred Rewards Gold card now gives new cardholders 10,000 Membership Rewards points once they've spent £3,000 in the first three months—the card used to give cardholders a 20,000 point welcome bonus after spending just £2,000. Here are the cards impacted and the change to welcome bonuses for each:
| Cards Affected | Before 16 April 2019 | From 16 April 2019 | ||
|---|---|---|---|---|
| Welcome Bonus | Minimum Spend Requirement | Welcome Bonus | Minimum Spend Requirement | |
| American Express Preferred Rewards Gold Credit Card | 20,000 Membership Rewards points | £2,000 | 10,000 Membership Rewards points | £3,000 |
| American Express Preferred Rewards Credit Card | 10,000 Membership Rewards points | £1,000 | 5,000 Membership Rewards points | £2,000 |
| American Express Preferred Rewards Low Rate Credit Card | 5,000 Membership Rewards points | £500 | 2,500 Membership Rewards points | £1,000 |
Are Amex Preferred Rewards Credit Cards Still Good Value?
The Preferred Rewards cards can still be valuable, depending on your spending patterns. For example, a cardholder spending £15,000 a year (including £2k on flights and £2k at Amex Travel) could earn points worth £205 to £410 their first year, based on how they are able to redeem their points.
Here are the potential rewards for a cardholders spending £15,000 per year on their card (enough to earn the annual bonus on the Gold card). The range of potential values reflects what a cardholder might be able to earn based on how they redeem points. For example, points can be redeemed for 0.5p apiece at 1,000 online retailers or possibly twice the value, or more, for flight upgrades.
| Card | Potential Value | |
|---|---|---|
| Preferred Rewards Gold | ||
| Year 1 | Welcome Bonus | £50 to £100 |
| Annual Bonus | £50 to £100 | |
| £15,000 Spending (including £2k on flights and £2k at Amex Travel) | £105 to £210 | |
| Annual Fee | waived | |
| Total Reward Value | £205 to £410 | |
| Year 2 | Annual Bonus | £50 to £100 |
| £15,000 Spending (including £2k on flights and £2k at Amex Travel) | £105 to £210 | |
| Annual Fee | -£140 | |
| Total Reward Value | £15 to £170 | |
| Preferred Rewards | ||
| Year 1 | Welcome Bonus | £25 to £50 |
| £15,000 General Spending | £75 to £150 | |
| Total Reward Value | £100 to £200 | |
| Year 2 | £15,000 General Spending | £75 to £150 |
| Total Reward Value | £75 to £150 | |
| Preferred Rewards Low Rate | ||
| Year 1 | Welcome Bonus | £12.50 to £25 |
| £15,000 General Spending | £75 to £150 | |
| Total Reward Value | £87.50 to £175 | |
| Year 2 | £15,000 General Spending | £75 to £150 |
| Total Reward Value | £75 to £150 | |
As you can see, while the Gold card has the potential to create the most value in year 1, it may be the least valuable of the three Preferred Rewards cards in subsequent years. For those spending more on flights and/or Amex Travel, however, the Gold card is likely to remain the most valuable due to the higher earning power on those categories.
Preferred Rewards Gold
If you typically charge £1,250 to your credit card each month in places that accept Amex—enough to earn the annual 10,000-point bonus—then the Preferred Rewards Gold card can still create good value despite the smaller welcome bonus, especially in the first year when the £140 annual fee is waived.
While the value of the 10,000-point welcome and annual bonuses depends upon how you redeem your Membership Rewards Points, they can still be worth anywhere from £40 if you redeem the points for statement credit up to £200 or more if you're able to use the points towards a valuable flight upgrade (e.g., from Premium Economy to Business).
While the card is most valuable in the first year (when the annual fee is waived and you can earn a welcome bonus), it can still be relatively valuable in ongoing years depending on your spending patterns. In particular, the card is tailored to reward those who spend more than £15,000 per year (enabling you to earn a 10,000 Membership Rewards point bonus every year) and those who earn 2X or 3X the points by using the card abroad or for certain travel-related expenses. As you can see below, the rewards rate doubles for spend with airlines and in foreign countries and triples for spend at American Express Travel.
Earnings with Preferred Rewards Gold Card
- Earn 1 Membership Rewards point for every £1 spent on general purchases
- Earn 2 Membership Rewards points for every £1 spent directly with an airline or in a foreign currency
- Earn 3 Membership Rewards points for every £1 spent at American Express Travel
- Welcome Bonus: 10,000 points with £3,000 of spend in the first 3 months
- Annual Bonus: 10,000 points with £15,000 of spend each year
That said, the Preferred Rewards cards are not the cheapest way to spend abroad, as they charge a 2.99% fee on non-Sterling transactions. There are other credit cards for travel that charge no fx fees.
Preferred Rewards
Those who don't spend much on airlines or with American Express Travel might get decent value from the free Preferred Rewards card instead of paying up for the Gold card. Earing 1 point per £1 of spend translates into a rewards rates of .5% to 1%, depending on how you redeem. Unless you are proficient at extracting higher values from points through flight upgrades, Amex's cashback cards (the £25 per year Platinum Cashback or the free Platinum Cashback Everyday) might be a better option as they offer rewards rates of .5% to 1.25% on long-term spending—without the hassle of managing points.
Earnings with Preferred Rewards Card
- Earn 1 Membership Rewards point for every £1 spent on general purchases
- Welcome Bonus: 5,000 points with £2,000 of spend in the first 3 months
Preferred Rewards Low Rate
The Low Rate card offers the smallest welcome bonus, worth as little as £12.50. Similar to the card above, unless you are accustomed to redeeming Membership Rewards points for travel (e.g., flight upgrades) then you might get more value for less work from one of Amex's simple cashback cards.
Earnings with Preferred Rewards Card
- Earn 1 Membership Rewards point for every £1 spent on general purchases
- Welcome Bonus: 2,500 points with £1,000 of spend in the first 3 months
To compare the potential rewards on Amex's Preferred Rewards credit cards and their cashback cards, we've modeled rewards for the first two years on each card for a cardholder spending £15,000 per year. £2,000 of this spending is on flights and £2,000 on Amex Travel, earning higher rewards on the Gold card. See how they compare.