Home Credit Cards Stop Thinking American Express Statement Credits Are The Same As Cash

Stop Thinking American Express Statement Credits Are The Same As Cash

by joeheg

I’ve been reading for years how a credit card with a high annual fee isn’t as expensive as it seems because the card provides statement credits that are just like cash and 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 wasn’t spending all that money. The fault in that logic is 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 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 easy to make sure you break even. I will try to use these credits up as soon as they’re available. That isn’t 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 $695 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 into getting 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. I’ll pay for your Clear subscription and once every 4 years, I’ll pay your $100 Global Entry fee.

How about I throw in some more things that you’re even less likely to use. Here’s a $25 monthly credit for Equinox Health Clubs and a $300 credit if you purchase a SoulCycle bike. That’s not all. Here’s $25 monthly in digital entertainment credits (but it’s only good for a few services.) Not convinced? I guess I can throw in a monthly credit for Walmart+ membership. That’s another $155 per year.

See? You’re making $1500+ for giving me $695 and 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 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.

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 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. For 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 have never gone to is worth about nothing to me. I used the credit so that 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 $695 fee for the Platinum card, I will 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 instead 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.

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 on 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. I’m saying that claiming the statement credits will offset the annual fee on a dollar-for-dollar value is not 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 revamped the Gold card and Business Platinum by raising the annual fees while providing additional statement credits. Obviously, they know this is a moneymaker 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

11 comments

Mak January 9, 2022 - 1:20 pm

Excellent article with a lesson Amex customers need to learn. Amex “credits” are like picking up pennies in front of the steamroller that is your annual fee. If you are the sort of person who likes clipping coupons and collecting Green Stamps for stuff you don’t need or can buy less expensively elsewhere, Amex has a deal you’re gonna love!

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Chris L January 9, 2022 - 1:23 pm

The only blog with truth about the Platinum card.

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Someone S. January 9, 2022 - 2:03 pm

To help offset the annual fee, it’s much easier to ask for a retention offer than play with their coupon book. Yesterday: my options were 40k MR for 3k spend or $400 for equivalent spend.

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JohnB January 9, 2022 - 2:15 pm

Just like your title, your mileage may vary. I have Citi Premier, don’t use anymore. I will product change. I have a Chase Sapphire Reserve, not using anymore, will product change. I have an Amex Gold, not using much, will probably close. But my new Amex Platinum, I use consistently and receive far greater value for the fee than all the other mentioned cards.

I use the Saks credits to buy gift cards, every 6 months. Sitting on $300 of Saks gift cards. Easy money for saving for Tumi luggage. I move the $200 airline fee reimbursement to United TravelBank, easily get the value from that. I subscribe to Sirius Radio and easily get the $240 value from that. I used the $200 hotel credit and I can easily get the value from that. For those benefits I receive $740 and that makes the $695 into $-45 a year. Now the benefits may change and I will re-evaluate the value. But currently without any backflips, etc., I get more value from Amex Platinum than any other card. Especially the Chase Sapphire Reserve as that card is overpriced and low value for me!

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Steven January 9, 2022 - 4:42 pm

This. Except I sell my Saks gift cards thru card cash. For now, as long as these loopholes are staying open, one can almost justify the platinum based on the fee alone. Throw in 5x for airfare, and biannual retention offers, it can be worth keeping,

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Peter Austin January 9, 2022 - 9:35 pm

I thought Saks cards not allowed???

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SMR January 9, 2022 - 5:16 pm

Stop thinking points have cash value…

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Jay January 9, 2022 - 8:40 pm

Points do have some cash value. Sure it gets overstated on blogs, but I cashed out about 400k amex points to a Schwab account last year at the 0.0125 rate. Was it the “highest value” I could have gotten? No probably not. But I don’t want to go to the Maldives… just want to fix my car and buy some groceries.

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wanderlust18blog January 9, 2022 - 9:04 pm

Bingo!
Concise and clear.
We have all been lured into the hamster wheel.

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D T January 9, 2022 - 10:38 pm

Well, I see your point, but I think it is more of a personal choice and individual lifestyle.
I haven’t missed getting full $200 Delta credit any given year (never used it for incidentals).
My wife, I and our son and his wife use Delta and Centurion lounges quite often. Our son pays $175 for additional 3 cards.
All 4 of us use Clear and love it. On my last trip to NY I lost my ID and Clear saved the day at the airport.
Buying either Gift Card or discounted items at Saks has some value.
I found Walmart+ membership useful, but I agree that digital credits.are not that valuable.
We get $100-$200 from MGM offer back every year for our annual trip to Las Vegas.
Uber credit gets fully used every month in our 2 households.
We also easily use $200 hotel credit.
I think that this card could be good for some costumers while some other could easily live without it.

All in all, just as your blog is named – YMMV

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Quo Vadis January 9, 2022 - 11:10 pm

Solid points in this post. Got the Amex Platinum back when they were offering 100,000 Membership Rewards points and the annual fee was $450. By renewal time a year later, the annual fee was jumping to $550 and I had already gotten the Chase Sapphire Reserve, so I bid farewell to the Plat. As you have clearly pointed out, the real value of all the offered Amex statement credits does not at all equate to their face value. And that’s the trap.

Obviously, there are some Amex cardholders who are bona fide Uber and Saks customers who would patronize these companies even without the Platinum card, so for these folks, the credits are gravy. But for most folks, there is a real opportunity cost to trying to utilize the Amex credits.

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