AMEX bonus miles – what’s an acceptable surcharge?

American Express cards are typically more generous on bonus miles. On our last count, there are five cards with bonus miles, all with their own criteria.

That said, AMEX is not as widely accepted as compared against Visa/Mastercard in Singapore. And they tend to attract additional surcharge of between 2% to 5%. A question that we often receive is how much surcharge is acceptable for those bonus miles?

1. Depending on the bonus miles, you can accept varying levels of surcharges

Our model is based on assigning a value to each mile that you receive. In general, if you are redeeming the miles for economy class tickets, the value is lower at 1.5 cents a mile, and business class tickets at 2 cents a mile. Hence, you should accept higher surcharges if you are redeeming for business class tickets. To be conservative, our calculations are always based on a lower value.

28 June 16 Bonus cards (02)

 

2. In most cases, the surcharges for bonus miles are acceptable

Analysing the above table, you can see that the effective discount, by assigning a 1.5 cent value to each mile is pretty high. The more bonus miles per S$ spend, the higher the effective discount.

Compared against the next best card, which at the current moment is ANZ Optimum is 5% (if you opt for correct category), the difference will be you acceptable charge before you starting losing value.

 

3. Except for bonus miles, never accept surcharges for AMEX transactions

Bonus miles must be your only case for accepting that additional surcharge. If there are surcharges on AMEX transactions without any bonus miles, there will definitely be a better Visa/Mastercard out there to be used.

Hope this post gives a deeper insight on the sensitivity of value after surcharges!

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