In a market where every other bank has raised FCY fees, American Express has been a surprising exception. Despite its reputation for being a “high fee” platform, AMEX has steadfastly maintained its FCY charge at 2.5%, even using this as a selling point on some of its eDMs.
Furthermore, AMEX cards may not have the highest rewards earning rate, but they were noteworthy for having one of the most generous rewards policies out there. While other banks bend over backwards to add to their exclusion lists, AMEX’s attitude has been more laissez-faire, only excluding obvious things like cash advances, annual fees and late payment fees.
Well, it looks like they’ve finally blinked. This morning, AMEX sent an update to its customers detailing some changes it’s making with effect from 1 March 2020.
AMEX is increasing its FCY fee to 2.95%
From 1 March 2020, the fees for foreign currency transactions will increase from 2.5% to 2.95%.
To be fair, AMEX hasn’t changed its fee since 2013, and the revised fee still puts them among the lowest in the market- only Maybank and HSBC are lower at 2.75% and 2.8% respectively.
That said, you’ll need to revisit your cost per mile calculations:
|CPM @ 2.5% FCY Fee||CPM @ 2.95% FCY Fee|
|AMEX KrisFlyer Ascend||June & Dec: 1.25
|June & Dec: 1.48
|AMEX KrisFlyer Credit Card||June & Dec: 1.25
|June & Dec: 1.48
|AMEX Platinum Charge||3.21||3.78|
|AMEX Platinum Reserve & Credit Card||3.62||4.28|
The funny thing is, the fee hike doesn’t actually change anything for me. It was always terrible value to use your AMEX Platinum card overseas, and this merely reinforces that.
Although the AMEX KrisFlyer Ascend/Credit Card may have looked tempting in June/Dec at 1.25 cpm, a 1.48 cpm makes it a lot more marginal (the UOB PRVI Miles comes in at 1.35 cpm year-round). In any case, I’ve simply been defaulting to the OCBC 90N card, which earns 4 mpd for a 3.25% fee, until 29 Feb 2020.
AMEX is adding new rewards exclusions
In addition to the FCY hike, AMEX will be adding four new rewards exclusion categories from 1 March 2020:
- Bill payments and all transactions via SingPost SAM kiosks and mobile app
- Payments to insurance companies (except payments made for insurance products purchased through American Express authorized channels)
- Payments to SPC service stations
- Payments for the purpose of GrabPay top-ups
These changes affect all KrisFlyer miles, STAR$ and Membership Rewards earning cards. Curiously enough, the AMEX True Cashback Card is not affected by these changes.
Let’s look at each of these exclusions in turn.
I was surprised to see this, because I didn’t even know it was possible to use AMEX cards at SAM kiosks.
According to Matthew, there are a few limited categories (Kaplan, SUTD school fees) where AMEX is accepted, but if you didn’t use that then I doubt you’d be impacted by this change.
Similarly, this isn’t actually that big a loss. Although American Express was one of the few cards that still awarded points on insurance payments, in reality it was nigh on impossible to find an insurance provider that accepted AMEX. Even if you did, you could always have done better by using the BOC Elite Miles World Mastercard (1.5 mpd) or the HSBC Revolution (2.0 mpd, if paid online), so like SAM, I don’t think too many people will mourn this.
The T&C state that insurance products purchased through American Express authorized channels will continue to earn points- I take this to mean Chubb.
Now this is where it starts to hurt a bit more.
The decision to exclude SPC is surprising. We know that AMEX has continued their tie-up with the petrol chain for 2020, offering cardholders a 7.1% statement credit (capped at S$150), but I didn’t think it would come at the expense of rewards earning- it certainly didn’t in 2019.
It looks like AMEX is taking a leaf from the UOB playbook by limiting double dipping. UOB does not award UNI$ at merchants which participate in the SMART$ program, such as Shell and SPC. My guess is that they’re co-financing part of the rebate, so they don’t want to further cut into their margins by giving points too.
This exclusion means that miles chasers will have to choose between miles and cash savings at SPC, but here’s a rare instance where I think cash savings may make more sense.
Suppose you had a Maybank World Mastercard, which earns 4 mpd on petrol. You’d get 10% off at SPC (by virtue of the SPC&U card), versus 21% off and no miles with an AMEX card. The effective trade is 4 mpd for an incremental 11% discount- a fair trade at a 1.8 cents per mile valuation, but obviously not as good as right now.
Ah, GrabPay top-ups, the elephant in the room.
AMEX has historically awarded points for GrabPay top-ups, even up to 3.2 mpd on the AMEX KrisFlyer Ascend for the first S$200 each month. Beyond that, you’d still enjoy the regular miles earning rate, a rarity in the market today.
From March, you’ll only earn points on Grab services like rides and food. I would imagine most people are still using the Citi Rewards Visa or UOB One for GrabPay top-ups, so this only affects you if you went above their respective caps. Nonetheless, it’s yet another landmark on the road to total exclusions by the banks.
How does this affect sign up bonus spending?
|Update: With effect from 1 April 2020, transactions which do not earn rewards points will also not count towards eligible spending for the purposes of sign up bonuses|
Despite the new exclusions, AMEX tells me that these transactions will still count towards eligible spending for the purposes of sign up bonuses.
In other words, your spending on GrabPay top-ups, SPC, insurance (if you could find a broker that takes AMEX) and SAM will count towards the S$20K needed to unlock 75K bonus MR points on the AMEX Platinum Charge, or the S$10K needed to unlock 15K bonus KrisFlyer miles on the AMEX KrisFlyer Ascend.
The question then is whether it’s worth giving up miles on those particular transactions for the purposes of hitting the sign up bonus threshold. If you’re just shy of the mark it might, but you’ll definitely want to do your sums properly.
It’s worth noting that AMEX will continue to award points for charitable donations, utilities bills, telecoms bills and education payments. This makes it a good catch-all card, provided the merchant takes AMEX in the first place.
I find it strange that banks continue to hike FCY fees, given that (1) you’d think technological improvements would reduce the cost of processing FCY transactions (2) it only sends more customers fleeing to no-fee platforms like YouTrip and Revolut.