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Samir asks:
- Cancelling the card without transferring the points would make the points disappear.
- Downgrading the card means you are downgrading the Membership Rewards from transferable to non-transferable. This second class of Membership Rewards can only be used for less valuable things like gift cards.
- Holding the card any longer will cause the $175 annual fee to come due.
- Transferring the points today when there aren’t any transfer bonuses means missing out on one of the most valuable aspects of the Membership Rewards program: the huge value multiplier of transfer bonuses.
In Samir’s situation, I would hold the card and pay the annual fee. Here’s my reasoning:
As Samir said, if he cancels the card later, he’ll get a credit for the prorated annual fee. For instance if he cancels the card after six more months, he’ll get half the $175 annual fee credited back.
Transferring the miles now would be OK, but holding for a transfer bonus is way better. For instance, here are some recent transfer bonuses that have run:
- 50% more Avios
- 25% more Virgin Atlantic miles
- 43% more Delta miles (30% rebate)
- 30% more JetBlue miles
The best of those was the Avios bonus. For a few months this year, you could transfer 1,000 Membership Rewards to 1,500 Avios. When there are no transfer bonuses, one of the best MR transfers is to Avios, which I value at 1.7 cents per Avios. With that bonus, though, one Membership Reward was worth 2.55 cents (1.7 * 1.5).
The transfer bonus increased the value of each Membership Reward by .85 cents (2.55 – 1.7). Since Samir has 55k MR, that .85 cent per MR increase would increase the value of his stash by $467.50!
What this analysis means is that holding for a transfer bonus can greatly increase the value of your Membership Rewards, and if you have enough Membership Rewards, it’s worth it to pay an annual fee to wait for a transfer bonus.
In Samir’s specific case, the Avios transfer bonus may not interest him much, since he wants premium international travel. But a Delta or Virgin Atlantic transfer should come around in the next year, one would think, so paying the annual fee and waiting is the best deal.
What if you have fewer Membership Rewards?
If you have an account with just a few Membership Rewards, you should just transfer them and close the account to avoid the annual fee. What is the cut off between a few MR and a ton of MR?
It’s tough to say, but I’d put it at about 20,000 Membership Rewards. The reason is that 20,000 MR times the increase in value from a 50% Avios transfer bonus roughly equals the annual fee on the Premier Rewards Gold card.
Recap
If you have a ton of Membership Rewards, and your card’s annual fee is coming up, you have some tough choices.
The worst option is to close your account before transferring because you’d lose the points. Another bad option is downgrading to a card that doesn’t offer transferable Membership Rewards; that would cost you a ton of the value of your points.
The only viable options are to transfer the points now or pay the annual fee and wait for a transfer bonus. If you have more than 20,000 Membership Rewards, I recommend paying the annual fee and transferring at the first good bonus. Then close the account and get credited a prorated share of your annual fee.
Bonus Tip
While the card is still open, use it for its category bonuses when you aren’t clearing other sign up bonuses or using the Ink Bold/Vanilla Reload trick. The card earns 3x on airfare and 2x on gas, shipping, and advertising.
Just getting started in the world of points and miles? The Chase Sapphire Preferred is the best card for you to start with.
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This is so timely. My Amex fees for business gold and personal gold cards are coming due in about 3 weeks. I should be able to keep the one with lower annual fee ($125 vs $175) without losing any MR points right? Thank you
yes, you can keep your transferable MR as long as you have one transferable MR acct still open
Isn’t downgrading to the standard Green AmEx charge card an option? You’d pay a lower annual fee, and your MR points would remain transferable.
isn’t it also good to call for a retention bonus as well?
It is. He did. I don’t think AMEX is giving them out, but I won’t stop asking.
Oh so timely for me as well, though I just did an analysis of the earned MR last year minus any bonuses. The value is small for me, but in the positive to pay the annual fee (assuming I will have a similar year to last year). It looks like a keeper for me. I understand Amex is stingy with retention bonuses…does anyone have any success with retention on the PRG?
Offered 20K MR for paying annual fees, which they would not waive. Also offered 7500MR if I spend $3k within 30 days. Both offers accepted.
Called this past week on PRG card.Was offered immediate $130 credit plus $75 if I put $3000 spend on card in 60 days. So offer is $205 for a $175 fee.What’s not to like?
I am in the same boat however I was looking to upgrade to the platinum. I guess the question would be if they would give me the 25k points for the upgrade. Any experience with this?
do not upgrade. Apply for the Mercedes-Benz Platinum, then cancel the Gold card. You get way more Membership Rewards this way.
I thnk the calculation could be far simpler.
Using the same scenario as above, the cost of having acquired 55,000 Avios pts was $0.00.
If he waits for a 50% transfer bonus, he’ll have 82,500 Avios pts at a cost of $175.00 (this could be less depending on when the transfer bonus comes around, but we’ll assume worst case here).
So is 27,500 Avios pts worth $175.00? (0.63 cents). If you value Avios anything above that, makes sense to pay the annual fee.
OR cancel the PRG card and sign up for the Business version and still have the ability to transfer pts for another year and pay no annual fee. You get additional pts for the sign-up bonus. Only downside is an additional credit inquiry
I agree that the calculation is 27,500 Avios versus $175 or less.
I don’t agree that the cost of acquiring 55k MR was 0. Opportunity cost! But the cost of acquiring the MR is not relevant to this discussion anyway.
Can’t he just downgrade to something else and have crippled MR, but when a new offer down the road opens, apply for that one and those same crippled MR becomes full MR. This is why I keep my old school Blue card from back in the day.
There are two more good possibilities:
1) Make sure you are never without an MR Amex by applying for a new one, with a new signup bonus, before the fee on the old one comes due. Then cancel the old one. At a minimum, you should be able to get the Zync anytime, and add 10K to your MR balance.
2) Keep a no-fee Amex account open, convert to the MR “lite” points, close the old account with the fee coming due. When you sign up for a new MR, the lite points become convertible back to MR points.
I have a platinum card and plan to apply for another Amex charge card to replace once the annual fee is due, any idea which card is counted as same product so no sign-up bonus? I have heard somewhere that they consider the Green and Gold the same product, is it correct?
I would call up and ask what their policy is before applying.
Missed opportunity cost, missed churning bonus.
I would bite the bullet and cancel the Gold card. In 1 year he can reapply for the card and get a bonus again. If the calculation is “27,500 Avios versus $175 or less”. I would add + >25k+ AMEX points in a year.
No way. A transfer bonus is very likely to come in the next few months. So he’s not locked into holding it a year, just until one comes.
Scott, has the situation changed in regards to unused MR points and a pending renewal fee? My wife has an Amex platium card with 100k MR and a pending $450 fee in August, and I have the gold card, 85k MR and a pending $170 fee. Those are some pretty high fees to pay to roll the dice on a transfer bonus, which seem to be more rare now than in 2012. If we want to transfer them now, do you still recommend Virgin Atlantic as the best partner for long-haul international?
If you want to fly Virgin Atlantic. Otherwise Delta and Singapore are decent options.