Watch Out For This Fee If You Transfer AMEX Membership Rewards To A U.S. Airline

When booking our upcoming, spontaneous (for us) trip to London, I needed to top up our Delta SkyMiles balances to have enough miles in our accounts for the tickets. One of the reasons I like to earn flexible miles is the ability to transfer them where and when I need them. Since American Express is the only one of the three main flexible currencies that partners with Delta, I went to the Membership Rewards website to transfer 30,000 points from Sharon’s AMEX account to Delta.

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After having to verify information from the card, I was reminded of the hidden fee American Express adds if you want to transfer points to a U.S.-based airline.

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To transfer the 30,000 points out of Sharon’s account, she’d have to pay an $18.00 Excise Tax Offset Fee or have the option to pay an additional 3,600 Membership Rewards points. First of all, that’s a HORRIBLE use of membership rewards points since you’re only getting $0.005 (half a cent) worth of value per point. Redeeming points for purchases on Amazon.com even gets a better value, which is also an awful use of your points. For reference, our tickets cost 110,000 points and $241.83 and would have cost $3,661. That’s a value of 3.1 cents per point, six times the value of redeeming them for the Excise Tax.

Secondly, what’s this Excise Tax Offset Fee? Here’s American Express’ explanation:

Every time you transfer points into a U.S. airline frequent flyer program, your Linked Card account will be charged an excise tax offset fee of $0.0006 per point (with a maximum fee of $99). We charge this fee to offset the federal excise tax that we must pay when you transfer points. This fee may be more or less than the actual amount of excise tax we pay on any individual conversion. We may offer you the option to use points for this fee. For Additional Business Card Members who have a separate program account, any fee(s) associated with transferring points into a participating frequent flyer program will be charged to the Business Card account, for which the Basic Business Card Member is responsible to pay.

Since the fee is only charged when transferring points to U.S. airline frequent flyer programs, here are the airline programs you’ll need to pay a fee to transfer points to:

  • Delta SkyMiles
  • Hawaiian Airlines HawaiianMiles
  • JetBlue TrueBlue

I needed to transfer these points to Delta so I had no choice but to suck it up and pay the $18 to transfer the 30,000 miles. If you need to transfer a large number of miles, the maximum charge per transfer is $99 so there’s some advantage to transfer miles in bulk. However, you can avoid this fee by transferring points to a foreign airline. My dad and his wife were able to transfer 136,000 American Express Membership Rewards points into each of their ANA accounts with no added fees to book their trip from the U.S. to Bali and back from Thailand.

Here’s a list of the airline programs you can transfer Membership Rewards points into without having to pay any fees:

  • Are Lingus Aerclub
  • Aeromexico Club Premier
  • Air Canada Aeroplan
  • Air France / KLM Flying Blue
  • Alitalia Millemiglia
  • ANA Mileage Club
  • Cathay Pacific Asia Miles
  • Avianca LifeMiles
  • British Airways Executive Club
  • El AL Madmid Points
  • Emirates Skyrewards
  • Etihad Guest Miles
  • Iberia Plus Miles
  • Singapore KrisFlyer Miles
  • Virgin Atlantic Flying Club

While you’ll need to evaluate the value of having points in each of these programs (Note: some of them are horrible to redeem points from), since they’re from airlines outside the U.S., American Express will not charge the Excise Tax Offset fee to transfer points into any of these programs. They also won’t charge any fees to transfer points into their hotel partners.

I find the most interesting thing about these fees is that the other banks who offer transferrable points, such as Chase Ultimate Rewards and Citi ThankYou Points, don’t charge the same fee when tranferring points to U.S. airlines. You’re able to transfer Ultimate Rewards to JetBlue, United, and Southwest or Citi ThankYou Points to JetBlue with no fees.

Unfortunately, if you want to transfer points into your Delta SkyMiles account, AMEX is your only option so be prepared to pay the fee they’ll charge as part of the cost of playing the game of miles and points.

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This post first appeared on Your Mileage May Vary

 

 

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