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Are you planning to switch American Categorical Membership Rewards factors to a U.S. airline? You would possibly need to benefit from this workaround to switch your Amex factors to Alaska Airways Mileage Plan.
Be aware: You’ll must pay an excise tax offset payment. Right here’s a proof of the way it works — and easy methods to e book home flights with out paying this pesky payment.
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 applications. You’ll regularly see them when buying factors or miles straight from airways, however in addition they come into play with transferable factors currencies.
To account for these taxes, American Categorical imposes an “excise tax offset payment” when transferring Membership Rewards factors to a U.S. airline’s loyalty program. Right here’s 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 will likely be charged an excise tax offset payment of $0.0006 per level (with a most payment of $99). We cost this payment to offset the federal excise tax we should pay whenever you switch factors.”
As famous, this payment solely applies to the frequent flyer applications of U.S. airways. For Amex, this consists of three applications:
Transfers to lodge companions and worldwide airline applications won’t be charged this payment.
Associated: American Categorical Membership Rewards switch companions: Maximize your factors
What does the excise tax offset payment seem like?
When transferring to a U.S. frequent flyer program like Delta SkyMiles, Amex will immediate you with an excise tax offset payment.
On this instance, you’ll have to pay a $30 payment to switch 50,000 Amex factors to Delta SkyMiles. You may also use your factors to cowl the excise tax offset payment, however this isn’t a very good use of your hard-earned rewards. By utilizing 6,000 factors to keep away from the $30 payment, you’ll 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 payment
As famous above, this payment is just charged on transfers to 3 of Amex’s switch companions. In case you convert your Membership Rewards factors to a lodge program’s forex, it’s not imposed. However most significantly, it’s additionally not charged for transfers to worldwide airline loyalty applications — and you may typically use these to e book home flights.
For instance, if there’s award availability, you should utilize Virgin Atlantic Flying Membership factors on Delta Air Traces and Hawaiian Airways. Additionally, JetBlue TrueBlue is a revenue-based loyalty program, so you could need to crunch the numbers and see if reserving these flights by way of American Categorical Journey makes extra sense. In spite of everything, these are handled the identical as paid tickets and are thus eligible for rewards.
Lastly, it’s price noting that no different transferable factors program expenses a payment for these transfers. When you have factors with Citi ThankYou Rewards or Chase Final Rewards factors, for instance, you possibly can switch these to JetBlue with none added cost.
Backside line
For probably the most half, transferring Amex factors to Delta, Hawaiian or JetBlue doesn’t make sense, particularly since there’s an excise tax on these factors transfers. Moreover, not one of the applications supply spectacular worth in your rewards.
We’d advocate doing so solely whenever you’re simply wanting a given redemption and need 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, make sure you pay the excise tax offset payment together with your American Categorical card, as redeeming Amex factors on this manner is a horrible worth.
In any other case, follow lodge or worldwide loyalty applications, as that’s one of the simplest ways to maximise your Membership Rewards factors.
Associated: How one can redeem American Categorical Membership Rewards for max worth
