Posted by Chuck on October 22, 2018
Credit Cards

Published on October 22nd, 2018 | by Chuck

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How Long to Keep your Upgraded American Express Card to Satisfy the RAT Team

We are all well aware that American Express had language added that they can claw back signup bonuses in the event of abuse, and their RAT team has actually been doing that. Two key things to avoid clawbacks are to ensure the spend is normal, non-manufactured, and to keep the card for a year. Given they swallowed a high acquisition cost, Amex doesn’t want you downgrading the card within a year to get a prorated refund on most of the annual fee.

A more confusing scenario arises in the event of an Amex upgrade offer. They regularly send out generous offers enticing cardmembers to upgrade to higher end cards. Personally, I just had this experience with two Business Green cards (one had been a business Platinum and one a Business Gold Rewards) which were targeted to get 50,000 points with $10,000 in spend.

Amex runs their annual fees with a bit of a complicated system. They do prorate your fee refund on the lower card, but they don’t then charge you the full annual fee on the upgraded card (e.g. $450). Instead, they charge you the prorated higher fee for the rest of the year.

I’ll use my own case to illustrate. When upgrading Green to Platinum, I see on my statement a $31.66 refund adjustment for the final 4 months of my Green year, and a charge of $150 for the first 4 months of my Platinum year. Then, 4 months later, a full $450 fee hits for the coming full year of Platinum.

This is all fairly innocuous – just a computer program of how they run the annual fees – but it comes to a head when receiving an upgrade offer. It’s pretty common for people to evaluate whether to keep a credit card when they see the annual fee post to their statement. But if you recently accepted an upgrade offer, be sure to keep the card for a full year.

Twitter user @jonNYC and Milestomemories commenter gus report doing an upgrade bonus, then downgrading many months later when the annual fee posted to their statement, and Amex proceeded to claw back their upgrade bonus.

Two lessons learned:

  • Amex claws back upgrade bonuses if you don’t keep the card for a year, just as they do so with new member bonuses.
  • They expect you to keep the card for a full year, irrespective of the annual fee posting schedule.

Unintentionally, Amex lands up gaining by running the annual fees based on the cardmember anniversary since people will now have to pay the first prorated fee and then the second full fee. You can downgrade one year from the upgrade mark – in midyear – and get a prorated adjustment, but a lot of people will forgot to do so and end up paying one-and-a-half high annual fees before downgrading.

Hat tip to @jonNYC and Milestomemories

Adding here a few notes based on the comments to this post:

  • Unclear whether when you accept a retention offer you need to keep the card for a full year. Same question for authorized-user bonuses. I believe both of those should be fine since there’s no “abuse” terms there that you accepted whereas upgrade offers do have abuse in the terms: “If we…determine that you have engaged in abuse, misuse, or gaming in connection with the welcome offer in any way or that you intend to do so (for example…if you cancel or downgrade your account within 12 months after acquiring it…), we may not credit Bonus Points to your account. We may also cancel this Card account and other Card accounts you may have with us.”
  • We haven’t heard of cobranded cards like Delta, Hilton, etc, getting clawbacks since the points are already deposited to the partner account. (Update: One data point here.)
  • If you accepted an upgrade offer from a low card to a mid-level card and then got an upgrade offer to a top-level card within the year, you’re probably safe to upgrade again – even within the year – since the offer is coming directly from Amex themselves.

 



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How does that work for the Blue Cash Everyday to Preferred card?

Besides the “prorate your fee refund on the lower card” part, everything else should be the same. You have to keep the upgraded card for a full year before downgrade.

That’s a big rat.

Looks like a NYC rat!

There’s an obvious solution to not paying an annual fee besides canceling your card that will prevent bonus from being pulled back.

Do share. I for one am unable to see said solution.

Doesn’t it annoy you when someone gives a cryptic response like that and then doesn’t reply to any follow-up questions?

I think their brain kicked in and they realized maybe they aren’t so smart after all 😀

Downgrading?

as long as one doesn’t horde MR points and uses them ASAP, let’s just say the RAT doesn’t throw you in “debtors prison” if there is a future clawback

I think the issue may be that sometimes the offer is for statement credits…which as we saw with the Staples debacle, will be charged back(having nothing to do with points)…not that I’m ok with all that, just pointing it out. In addition, Amex is always a statement behind on the cash back rewards for purchases.

Does this generally apply only to MR-earning cards? Amex wouldn’t be able to claw back an upgrade offer on a Hilton card, would they?

I had the same clause when I upgraded from my BCE to BCP last year so I doubt it only applies to MR-earning cards.

Does this hold true for retention bonuses as well?

How about upgrading an upgrade within the first year?

My situation: upgraded from no-fee Hilton to Ascend back in May. Now have an offer to upgrade my Ascend to Aspire, but it’s only been 5 months. Does upgrading not warrant clawback, since it specifically states cancelling/downgrading?

@DOC – would love an answer too. I assume we are safe to do another Amex offered upgrade from ascend to aspire for two reasons. 1) They are making the offer. 2) They want you to upgrade to a higher fee card as opposed to downgrade.

Be the DP amd report back. I suspect since upgrading theoretically gets them more annual fee you would be fine (as long as you keep the new Aspire for at least a year).

I can be one DP. They emailed me urging me to upgrade to the Gold from Green with a spend bonus. I got the bonus. Then 8 months later while on the phone with a csr we agreed I didn’t need the Gold and I closed it. A week later the bonus got clawed back. It took calls to main office to get that reversed because I’m a huge customer. The computer filter is set to closure in < year = clawback. Period.

hi i had the same case, do you mind sharing how did you contact the main office? Did you send a letter or call? if call where? I talked to customer rep but that was useless

I kept insisting on a manager and an on-shore csr until eventually I got one. Afterward people told me I should have called the main office here in the US. Those offshore csr’s are so bad it’s insulting.

Also, upgrades or downgrades are closures.

I think this only applies to MR cards and NA for co brand cards like delta / spg ?

But i think if we do the cancel / downgrade on non MR cards within a year , we may fall on the negative side of amex and may forego future sign ups with those irritating pop ups

There are a lot of data points on MR cards, I am yet to hear about a co-branded card claw backs to due upgrade/downgrade. Legal language has been there for a while for upgrade offers for Aspire (or Ascend), but I haven’t see it being enforced yet.

Cheers,

PedroNY

Thank you for this…was contemplating cancelling very soon myself..and with another amex bonus on the line I was going to wait just a few more months, but before the 1 year mark. I thought it would be prudent to just wait the 12 months…thank you for the confirmation!

just to make sure i understand, the advise here is that it’s okay to upgrade and keep for 1 year from the time of the upgrade (remainder of the year for lower card + the first x months of the higher card year), do not have to wait until the 1 full year of the higher card to pass?

As I understand it…you get a card in May 2018 and upgrade in Aug 2018. You shouldn’t cancel until Sep 2019. That means that you’ll have had the upgraded card for a full year and not be subject to clawback.

I understand the cancelling part. What about downgrading back before Sep 2019?

This is the quote that Chuck quoted. It is as clear as day to me.

“you cancel or downgrade your account within 12 months after acquiring it…”

So what would happen if I didn’t keep it for a year? I downgraded my Hilton Surpass to basic after 10 months or so after its upgrade. Nothing has happened yet. Does it apply only to Amex’s own cards?

What happens for AU bonuses? Do I have to keep the AUs on for a year?

A little bit different understanding on the first posted pro-rated AF. I think the clock starts on the first time an AF is assessed.

My example is on the Hilton card. The first time I upgraded from non-AF version to then Surpass card, I was charged full AF. I downgraded a year later. The next time I upgraded, I was charged partial fee. I went back to my records (Yes I keep a record of all those shxt), it shows that it was calculated using the first upgrade date as the start of the membership year for pro-rated purposes.

In your case, the Green card has an AF as well. So it is essentially the same thing.

So, a little correction to what you wrote: the clock starts on the first AF being assessed.

Just read DPs on clawback of RDs for those who upgraded to Everyday Preferred, then downgraded back to no AF Everyday card. The RATs are doing a great job for axp.

Time to tighten up, look out for more clawbacks!

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