Amex MRCC Reward changes from April 2021

Amex MRCC has announced changes in the reward structure from April 2021. In an email to its customers, Amex has outlined the changes. Below are all the details about the new changes, how they affect you as a cardholder, what could be Amex’s rationale behind the move and what should be your strategy with MRCC now.

Amex MRCC Reward Changes

Below are the changes that will happen on Amex MRCC credit cards.

1. Monthly bonus reward points: Every cardholder will get 1000 bonus reward points on doing 4 transactions of 1500 every month. Currently, cardholders get 1000 bonus reward points on doing 4 transactions of 1000 or more every month.
2. Additional 1000 reward points: Every cardholder will get 1000 additional reward points upon spending 20,000 or more in a month. You need to enrol for this benefit from here. This is a one-time enrolment.
3. New cardholders will get 4000 reward points as a welcome gift on spending 15000 in the first 90 days. You can get an Amex MRCC card for the first year free and get 4000 reward points on spending 5000 instead of 15000, by applying from here.

How the Amex MRCC reward changes affect the cardholder?

Well, if you are one of those cardholders who do only 4 transactions in a month to get 1000 reward points i.e 48-50k annual spends, resulting in a reward rate of 6.3%, these changes are bad news for you. The reward rate for you has declined from ~6.3% to 3.3%.

However, if you end up spending anywhere between 72k to 150k (fee waiver limit), there is no impact in terms of the reward rate. In fact, if you end up spending more than 20k a month even for a couple of months your reward rate will improve. This will be true especially for cardholders who usually spend 100-150k in a year on Amex MRCC. In the last 12 months, I have spent more than 20k twice on MRCC; so that’s would have been additional 2000 reward points for me, a potential reward rate of 3.8%.

For someone who spends around 250k i.e. 20k every month, the new changes increase your reward rate by 70% from 2.6% to 4.4%. As you will earn 2000 reward points every month as against 1000 reward points.

Why Amex has done these changes?

This is completely my take. Amex is trying to deter cardholders from doing only 4×1000 transactions on Amex MRCC. At the same time, Amex is rewarding its frequent users with more reward points. With a carrot of additional 1000 reward points, many cardholders who are currently doing monthly spends of around 12-15k (just to get a fee waiver) may start using Amex MRCC more frequently. Thus increasing the average spend per card from 150k to maybe closer to 240k.

Further, for Amex, a cardholder who pays 0 annual fees and spends 250k in a year generates 2.5x more revenue for Amex than a cardholder who spends only 50k and pays an annual fee of 1500. Thus, Amex won’t mind losing a few customers in the low spend bracket.

What should be your strategy with Amex MRCC?

As discussed earlier, for most of the Amex MRCC cardholders, the changes in the reward structure don’t impact the reward rate. In fact, with these new changes, you will end up with higher reward points. Therefore, if you were doing annual spends of 100-150k continue using your Amex MRCC as usual. Obviously, doing 4×1500 transactions will be a bit more difficult than doing 4×1000, but that’s okay.

Should you target spending 20k a month on MRCC and get those additional reward points? Definitely. Not many cards will give you a 4.4% annual reward rate on 250k annual spends.

If your spends were just about 50k per annum, your reward rate will decline. Start doing 4×1500 transactions a month. You will end up with a reward rate of ~4.5% still one of the best out there.

Another thought for me was, what should I do with my Amex Plat Travel credit card? Amex MRCC at 400k spends gives a 3% reward rate against a 4.5% that Amex Plat Travel offers. Thus will keep my Amex Plat Travel for now.