Stop Thinking American Express Statement Credits Are The Same As Cash

I’ve been reading for years about how a credit card with a high annual fee isn’t actually as expensive as it seems because the card provides statement credits that are just like cash and therefore bring down the “actual” cost of having the card.

I believed this wholeheartedly for a long time. I had no problem carrying multiple cards with high annual fees because I really wasn’t spending all that money. The fault in that logic is that I am actually spending that money and then just getting my own money back later on, with restrictions.

For some cards like the Chase Sapphire Reserve and the Citi Prestige, the credit is (or soon will be in case of the Prestige) good for any travel expense. If you have one of these cards, I’m sure you have at least that much in travel expenses each year so it’s pretty easy to make sure you break even. I try to use these credits up as soon as they’re available. This is not the case with American Express credits.

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Let’s do a role-playing exercise. Pretend someone is making this business proposition to you:

Hi there! Nice to meet you. Give me $550 right now. Sometime in the next year, you can get $200 of the money back from me if you spend money with a specific airline (that you need to pick right now and can’t change your mind) on something I say is an acceptable expense. For most of the things you can spend money on, you might already get them for free or are things you don’t want but I’m sure you’ll find some use for them. You might be able to trick me to get the money back but it’s inconvenient and limits the airlines you can pick even further.  

To sweeten the deal, I’ll give you $15 per month for an Uber, but I’ll keep the $15 during the months you don’t use it. Just to be nice, I’ll even throw in an additional $25 in December. Oh, and I’ll also give you $50 to spend at Saks Fifth Avenue every six months. Still not enough? OK. Once every 4 years, I’ll pay your $100 Global Entry fee.

See? You’re making $600 for giving me $550. Taking food right out of my kids’ mouths. I’ll never stay in business but I like you. If you sign up and then tell your friends about this offer, I’ll even throw a little bonus your way. 

Sounds too good to be true, right? Remember what you were told when deals sound like you’re getting something for nothing? Things are not always as they seem. Here’s the problem I have with AMEX and their statement credits with cards like the Platinum card.

1. The Airfare Travel Credit Is Too Restrictive

Sure AMEX gives you $200 for fees and expenses on the airline you pick at the beginning of the year. However, these expenses are limited to the following types of charges:

  • Checked baggage fees
  • Overweight/oversize baggage fees
  • Change Fees
  • Phone reservation fees
  • Pet flight fees
  • Airport lounge day passes and annual memberships
  • Seat assignment fees
  • In-flight amenity fees (beverages, food, pillows/blankets, etc)
  • In-flight entertainment fees (excluding wireless internet)

Do you spend $200 with a single airline for expenses like these? I’d imagine the airline you pick would be the one you fly on the most so hopefully you have status or at least the co-brand credit card to get a free checked bag.

Other travel cards will reimburse for any airline expense, including airfare, so AMEX is way behind the rest of the market with this benefit. To use the benefit, I have to charge the fees to the AMEX Platinum card, which is not my primary travel card because it lacks insurance for trip delays or cancellations.

2. The Uber Monthly Credit Can Easily Go Unused

I don’t travel every month and I don’t need to use Uber at home except for special circumstances. Using $15 a month is a pain and I often found myself looking at Uber Eats on the 29th of the month to order something for lunch just to use up the money. I always had to pay extra because between ordering the food, delivery fee, and tip, the bill was always over $15.

3. I Only Have To Renew Global Entry Every Five Years

Getting a $100 Global Entry credit once every five years (they’ll allow every four because you need to renew early) isn’t worth $100. It’s worth $25 a year. No, that’s not even right. Four of the years, it’s worth zero. I also have several other cards that provide this benefit and have a lower annual fee.

4. I Don’t Shop At Saks Fifth Avenue

Giving me $50 credit at a store I never have gone to is worth about nothing to me. I used the credit just so it wouldn’t go to waste but I don’t consider it to be worth $100 a year.

5. There’s An Opportunity Cost When Paying Up Front

Don’t let me lose you on this one:

Opportunity Cost – The loss of potential gain from other alternatives when one alternative is chosen.

Since I’ve already paid the $550 fee for the Platinum card, I’m going to make choices that allow me to get back the money in statement credits from AMEX. I might fly on an airline with a higher airfare or with less favorable flight times because it’s the one picked for my AMEX credits. Maybe I order from UBER Eats even if it’s more expensive instead of using Grubhub or Postmates just to use the $15 credit. I’ll also need to use my Platinum card to make purchases I would otherwise have used a different card for so I could get better insurance coverage.

All of these decisions have a related cost. I would rather have taken the cheaper flight with the better times. My favorite restaurant wasn’t on Uber Eats so I needed to get food from somewhere else. Hopefully, my flight isn’t delayed because I don’t have trip delay insurance.

Credits ≠Cash

Cash is cash and statement credits are getting money back on something you purchase. When you need to maximize every credit a card provides just to break even, often making decisions solely based trying to use the credit, that’s not a good deal.

Please understand, I’m not trying to say a card like the American Express Platinum is a good or bad value for anyone. What I’m saying is that claiming the statement credits will offset the annual fee on a dollar for dollar value is not totally accurate. AMEX knows this. There’s no way they’d offer a card that everyone makes money on even before considering the benefits they provide to cardholders.

Final Thoughts

AMEX just doesn’t do this on the Platinum card, as they’ve recently revamped the Gold card and Business Platinum by raising the annual fees while providing additional statement credits. Obviously, they know this is a money maker for them and people aren’t going to get as much back as they’re paying in additional fees.

When considering the value of any card, don’t take anyone’s word on what it’s worth to you. Only you know that. Maybe you can take advantage of every credit and this is the perfect fit for you. GREAT! You might never be able to easily use any of the statement credits and end up trying to figure out what to do with all of this “free money” you were supposed to get back. In cases like this, Your Mileage May Vary.

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This post first appeared on Your Mileage May Vary

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