15 Responses

  1. Terry
    Terry at |

    billion not trillion

  2. Rick
    Rick at |

    As per a WSJ article, AmEx said 94% of points were being redeemed. It’d be interesting to find out whats the number for airlines and other cards.

  3. Jon
    Jon at |

    I suspect the large cost is due to 1) large CC signup bonuses and 2) transfer bonuses. I know when I see a good transfer bonus, I immediately transfer out many MR points. Perhaps a better business model would be to slightly increase the transfer ratio and stop running transfer bonuses. That would encourage people to keep their points in their AmEx accounts for a longer period of time. It may also be beneficial to stop running short-lived 75K – 100K CC bonuses, and instead run 40K – 50K bonuses for longer periods of time. Just my two cents.

  4. Stephan
    Stephan at |

    Too many churning cards too often. That will change…

  5. Jerry H
    Jerry H at |

    Probably because they have crazy 100K MR signup bonuses (to USA) and nothing for Canadian/UK/etc.. 🙂

    I sure hope they don’t de-value AMEX MR overall, or only limited to certain countries

  6. Rasputin
    Rasputin at |

    The way I read it, they incurred $342M in total, not miss their estimates by that much.

  7. PedroNY
    PedroNY at |

    allowing to churn after 12 months of account being closed is probably contributing to this. I am sure they are trying to hold on to their market share, we’ll see what happens in 2013.

    Cheers,

    PedroNY

  8. lu
    lu at |

    @Jon, AMEX want you to transfer those points to other programs, because they can reduced the liabilities.
    Thats why they run those transfer bonuses.

  9. LufthansaFlyer
    LufthansaFlyer at |

    @$100 to $250 finder fee for each approved app via an affiliate link referral, they obviously miscalculated the impacted of a blog having 7 affiliate links in one post, and reposting that post 3 times that week. 🙂

  10. Rob
    Rob at |

    That would explain the bonus earning portal disappearing with no prior warning…

  11. bluto
    bluto at |

    They had a similar problem last quarter, too. “”Growth in spending is partially driven by the costly rewards Amex offers to its cardholders. While total operating expenses were up 13% from last year, cardholder rewards and services were up 25% from last year, reaching 42% of discount revenue compared with 37% in the prior-year quarter. We think higher rewards are inevitable, especially since the level of competition in rewards is rising”

    I think they’re discovering what the FF community has figured out long ago: the MR bonuses are more valuable than people realize. Customers are getting more savvy about acquiring points, and about maximizing redemptions. Amex is going to have to fix this, and I don’t think it’s going to be good news for customers with large MR balances.

  12. PointsCashMiles
    PointsCashMiles at |

    I’m just hoping this doesn’t mean we won’t be seeing any more transfer bonuses. I don’t have a ton of MR points, but I’ll probably transfer at least part of them out at the next good opportunity.

  13. TravelBloggerBuzz
    TravelBloggerBuzz at |

    Nice catch Seth! Time will tell where Amex goes from here. Not encouraging for the points addicts. BUT the company is still solidly profitable and may swing back hard at Chase to gain back some customers who left…

    It should be exciting. First 50% transfer bonus I see to the main partners I am out:-)

  14. Lively
    Lively at |

    I wonder how many points they are on the hook for that last run on the 100K for the Platinum Card last week.