After reading in the wall street journal that American Express was changing their rewards programs and fees I decided to take a good look at whether or not I wish to continue to be an Amex customer. I have accumulated about 37,000 points and decided this would be a good time exchange my points for some goods. I spent close to an hour searching through all the “rewards” and was extremely disappointed.

Issues with the reward program:

  1. The value of the points varies considerably from reward to reward. As an example, an iPod 4GB nano on Amex site cost 41,000 points. I can buy the same iPod on Amazon for $234.95. On this scale, each point is only worth 0.005 cents/point. Contrast this to a $100 Home Depot gift card on Amex which costs 10,000 points. The value here is 0.01 cents/point. That’s a 100% difference in value!
  2. Clearly, Amex plays an “optimization” game with their reward scheme. Popular items are inflated to depreciate the value of their points where unpopular items are deflated to nominal value. Quite frankly, this really annoys me.
  3. Cash Back: There is a harsh penalty for cash back redemption. A $100 Amex gift cheque ends up costing 20,000 points. Once again 100% penalty for not choosing a retail gift card (e.g. Home Depot).
  4. Amex card charges an annual fee of about $95 for their rewards program on their gold card. Although there are other benefits that come with the card (advanced concert ticket purchase, extended warranty plan), I’m not sure if I’ve ever used these “benefits.”
  5. Sadly, after searching for an hour, there really wasn’t anything that I wanted to exchange my points for, even worse when I was ready to settle for an item, I felt bad about paying an inflated price so I’ve opted to wait another month to see if anything better is added to the list at a reasonable price.

Ultimately, I think I may have found a solution. I came across a Costco Amex card which offers cash back incentives at more realistic values so I’ll investigate further and decide to convert from Amex Gold to Amex Costco. Otherwise, I may simply close the account and move on to other reward cards.