Are you planning to switch American Specific Membership Rewards factors to a U.S. airline? You would possibly wish to make the most of this workaround to switch your Amex factors to Alaska Airways Mileage Plan.
Observe: You will should pay an excise tax offset charge. Here is an evidence of the way it works — and how one can e book home flights with out paying this pesky charge.
What’s an excise tax, and the way does Amex cost for it?
The IRS defines excise taxes as these “imposed on sure items, service and actions” — together with sure transactions associated to loyalty packages. You will steadily see them when buying factors or miles instantly from airways, however in addition they come into play with transferable factors currencies.
To account for these taxes, American Specific imposes an “excise tax offset charge” when transferring Membership Rewards factors to a U.S. airline’s loyalty program. Here is the way it’s described on Amex’s web site:
“Each time you switch factors right into a U.S. airline frequent flyer program, your linked Card account might be charged an excise tax offset charge of $0.0006 per level (with a most charge of $99). We cost this charge to offset the federal excise tax we should pay once you switch factors.”
As famous, this charge solely applies to the frequent flyer packages of U.S. airways. For Amex, this contains three packages:
Transfers to lodge companions and worldwide airline packages is not going to be charged this charge.
Associated: American Specific Membership Rewards switch companions: Maximize your factors
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What does the excise tax offset charge appear to be?
When transferring to a U.S. frequent flyer program like Delta SkyMiles, Amex will immediate you with an excise tax offset charge.
On this instance, you will must pay a $30 charge to switch 50,000 Amex factors to Delta SkyMiles. It’s also possible to use your factors to cowl the excise tax offset charge, however this is not a superb use of your hard-earned rewards. By utilizing 6,000 factors to keep away from the $30 charge, you will redeem every level at simply half a cent apiece, or 1 / 4 of our September 2024 valuation of Amex factors.
How one can keep away from the charge
As famous above, this charge is barely charged on transfers to 3 of Amex’s switch companions. In case you convert your Membership Rewards factors to a lodge program’s foreign money, it is not imposed. However most significantly, it is also not charged for transfers to worldwide airline loyalty packages — and you may typically use these to e book home flights.
For instance, if there’s award availability, you should use Virgin Atlantic Flying Membership factors on Delta Air Strains and Hawaiian Airways. Additionally, JetBlue TrueBlue is a revenue-based loyalty program, so you could wish to crunch the numbers and see if reserving these flights by way of American Specific Journey makes extra sense. In spite of everything, these are handled the identical as paid tickets and are thus eligible for rewards.
Lastly, it is value noting that no different transferable factors program fees a charge for these transfers. When you’ve got factors with Citi ThankYou Rewards or Chase Final Rewards factors, for instance, you may switch these to JetBlue with none added cost.
Backside line
For probably the most half, transferring Amex factors to Delta, Hawaiian or JetBlue would not make sense, particularly since there’s an excise tax on these factors transfers. Moreover, not one of the packages provide spectacular worth on your rewards.
We might suggest doing so solely once you’re simply in need of a given redemption and wish to prime off your account with only a few thousand factors or miles — or to switch your Amex factors to Hawaiian Airways after which to Alaska Airways. Even then, you should definitely pay the excise tax offset charge together with your American Specific card, as redeeming Amex factors on this method is a horrible worth.
In any other case, stick to lodge or worldwide loyalty packages, as that is the easiest way to maximise your Membership Rewards factors.
Associated: How one can redeem American Specific Membership Rewards for max worth
