Beware Of This Fee If You Transfer AMEX Membership Rewards To A U.S. Airline

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I like to earn flexible miles because I can transfer them where and when needed. American Express is the only flexible currency that partners with Delta, so when I need extra SkyMiles for an award ticket, I head to the Membership Rewards website.

Recently, I had to transfer 48,000 points from my wife Sharon’s AMEX account to Delta.

After verifying information from the card, I was reminded of the fee American Express adds when transferring points to a U.S.-based airline.

To transfer the 48,000 points, I’d have to pay a $28.80 Excise Tax Offset Fee or 5,760 Membership Rewards points.

I have to say that’s a HORRIBLE use of Membership Rewards points since you’re only getting $0.005 (half a cent) per point. Redeeming points for purchases on Amazon.com even gets a better value, but it’s also an awful use of your points. For reference, our tickets cost 24,200 points and $10.80 and would have cost $383 if we paid for them. That’s a value of 1.5 cents per point, or three times the value of redeeming them for the Excise Tax.

AMEX’s Excise Tax Offset Fee

Secondly, what’s an Excise Tax Offset Fee? Here’s American Express’s explanation.

You’ll pay an excise tax offset fee ($0.0006 per point, up to $99) for points transferred to a U.S. airline frequent flyer program. This fee offsets the federal excise tax we must pay when you transfer points. It may be more or less than the actual amount of the excise tax we pay on any individual transfer.

Since the fee is only charged when transferring points to U.S. airline frequent flyer programs, here are the airline programs you’ll need to pay to transfer points to:

• Delta SkyMiles
• Hawaiian Airlines HawaiianMiles
• JetBlue TrueBlue

I needed to transfer points to Delta, so I had no choice but to suck it up and pay the $29 to transfer the 48,000 miles. If you need to transfer a large number of miles, the maximum charge per transfer is $99, so there’s some advantage to transferring miles in bulk. However, you can avoid this fee by transferring points to a foreign airline. My dad and his wife transferred 136,000 American Express Membership Rewards points into each of their ANA accounts with no added fees to book their trip from the U.S. to Bali and back from Thailand.

Here’s a list of the airline programs you can transfer Membership Rewards points into without having to pay any fees:

• Are Lingus Aerclub
• Aeromexico Club Premier
• Air Canada Aeroplan
• Air France / KLM Flying Blue
• ANA Mileage Club
• Cathay Pacific Asia Miles
• Avianca LifeMiles
• British Airways Executive Club
• Emirates Skywards
• Etihad Guest Miles
• Iberia Plus Miles
• Qantas Frequent Flyer
• Qatar Airways Privilege Club
• Singapore KrisFlyer Miles
• Virgin Atlantic Flying Club

While you’ll need to evaluate the value of having points in each of these programs (Note: some of them are horrible to redeem points from), since they’re from airlines outside the U.S., American Express will not charge the Excise Tax Offset fee to transfer points into these programs. They also won’t charge any fees to transfer points to hotel partners.

Do other banks charge the same fees?

The most interesting thing about these fees is that other banks that offer transferrable points, such as Chase Ultimate Rewards and Citi ThankYou Points, don’t charge the same fee when transferring points to U.S. airlines. You can transfer Ultimate Rewards to JetBlue, United, and Southwest or Citi ThankYou Points to JetBlue with no fees.

Unfortunately, if you want to transfer points into your Delta SkyMiles account, AMEX is your only option, so be prepared to pay the fee they’ll charge as part of the cost of playing the miles and points game.

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This post first appeared on Your Mileage May Vary