Why AMEX Charges a Fee When You Transfer Points to U.S. Airlines

26K

I like to earn flexible miles because I can transfer them to where and when I need them. 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, American Express 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

So 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
• 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. For example, I’ve transferred Membership Rewards points to Singapore KrisFlyer to book long-haul premium cabin flights. Since Singapore is a foreign airline, AMEX didn’t tack on the Excise Tax Offset fee.

AMEX Airline Partners Without Fees

Here’s a list of the airline programs you can transfer Membership Rewards points into without paying any excise tax fees:

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

Since these are international airlines, American Express won’t tack on the Excise Tax Offset fee. The same is true for transfers to hotel partners.

Do Other Banks Charge the Same Fees?

Interestingly, other banks that issue flexible points do not charge these fees.

• Chase Ultimate Rewards: No fee to transfer to JetBlue, United, or Southwest.
• Citi ThankYou Points: No fee to transfer to JetBlue.

So if you’re transferring to U.S. carriers like United or Southwest, Chase is a better option. But if you need Delta SkyMiles, American Express is your only choice—and that means accepting the extra charge as part of the cost of playing the miles and points game.

Want to comment on this post? Great! Read this first to help ensure it gets approved.

Want to sponsor a post, write something for Your Mileage May Vary, or put ads on our site? Click here for more info.

Like this post? Please share it! We have plenty more just like it and would love it if you decided to hang around and sign up to get emailed notifications of when we post.

Whether you’ve read our articles before or this is the first time you’re stopping by, we’re really glad you’re here and hope you come back to visit again!

This post first appeared on Your Mileage May Vary