What's Happening?
American Express has announced significant changes to its Membership Rewards program, particularly affecting international airline transfers. Starting December 15, 2025, the conversion rates for several frequent flyer partners will be adjusted, requiring up to 50% more points for the same number of frequent flyer miles. Partners affected include British Airways, Cathay, Etihad, Malaysia Airlines, Qatar Airways, and Virgin Atlantic, with conversion rates changing from 2:1 to 3:1. Emirates will see a change from 3:1 to 4:1. These changes mark a devaluation of the program, which was previously known for its extensive network of airline and hotel partners. Additionally, Thai Royal Orchid Plus will be removed as a transfer partner, replaced by Everyday Rewards, allowing points redemption for shopping at Woolworths and other associated stores.
Why It's Important?
The changes to the Membership Rewards program could significantly impact frequent travelers who rely on American Express points for international flights. The increased cost of transferring points to airline partners may lead to higher travel expenses for consumers. This shift could also affect the competitive landscape of credit card rewards programs, as American Express was previously noted for its favorable transfer rates. The introduction of Everyday Rewards as a partner may offer some relief for domestic consumers, but the overall devaluation could lead to dissatisfaction among cardholders who prioritize international travel benefits.
What's Next?
Cardholders have until December 14, 2025, to convert their points at the current rates before the changes take effect. This provides a window for consumers to plan and book travel under the existing terms. American Express has stated that the changes are intended to maintain choice and value for card members, though the specifics of this strategy remain unclear. The broader implications for the credit card industry could include adjustments by competitors to attract customers affected by these changes.
Beyond the Headlines
The decision by American Express may be influenced by broader economic factors, such as the cost of frequent flyer programs and potential regulatory changes regarding interchange fees. The Reserve Bank of Australia is considering reducing interchange fee caps, which could impact the profitability of rewards programs. These changes may reflect a strategic shift by American Express to balance costs and maintain program sustainability.
