Avoid Amex Annual Fee
Each card issuer has their own unique set of annual fee refund rules. There are so many rules that we have an entire guide devoted annual fee refund policies by issuer that you should bookmark. Today, though, I want to focus solely on American Express’ rules. I’ll explain what their annual fee refund policy is and give you a tip on how to avoid your Amex annual fee. It is a way to bend their rules, in certain situations at least. This will work tip will work for other lenders too. Ones that prorate annual fees on downgrades like Amex does at least.
American Express Annual Fee Refund Policy
The Amex annual fee policy isn’t the best out there but it is pretty much on par with most other lenders:
You must close or downgrade your card within 30 days of the statement closing date in order to receive a full refund of the annual fee. Thereafter, the only way to receive any type of refund is to downgrade and receive a prorated refund.
The second part of that is what I want to focus on. As long you carry a card that has another option in the same family with a lower annual fee, or no annual fee option, you can take advantage of this.
The following cards fall into this boat:
- Amex Platinum > Amex Gold > Amex Green
- Business Platinum > Business Gold > Business Green
- Delta Reserve > Delta Platinum > Delta Gold > Delta Blue
- Delta Reserve Business > Delta Platinum Business > Delta Gold Business
- Hilton Aspire > Hilton Surpass > Hilton Honors Amex
- EveryDay Preferred > EveryDay
- Blue Cash Preferred > Blue Cash Everyday
The ones listed with multiple tiers, like the Delta and Hilton cards, allow you to skip from top to bottom. What I mean by that is you don’t have to downgrade only one level. It is possible to go from the $550 Delta Reserve card all the way down to the no annual fee Delta Blue card. You do have to stay within the same family of card though, I listed them as such above.
My Situation & How This Plays Out In The Wild
This recently came into play for me personally. A little over a year ago we accepted a retention offer on my wife’s EveryDay Preferred and kept it open another year. This year we fired up chat when the annual fee posted to see if there was another offer. Unsurprisingly there was no offer. Offers in back to back years on the same card are rare these days.
We had already maxed out the $6000 in grocery spend bonus cap for the year. Yes, we did this in the first two months of the year to suck every last ounce of value out of the card before closing it. Once we were told there was no retention offer we informed the Amex chat rep that we would like to close the card.
That is when we were told it hadn’t quite been one year since we received our retention offer last year. Good on the Amex rep! American Express does not like if you close, or downgrade, a card within the first year of signing up, or taking a retention offer. They will sometimes claw back points from the welcome / retention offer if you do it. It will also land you on the Amex pop-up naughty list too. The problem was that the year anniversary fell outside of the 30 day window from when the $95 annual fee posted.
That meant we had two choices:
- We could choke down the $95 and try to complete the grocery bonus spend again at the beginning of next year. That would ensure we get some value from the annual fee at least. Then we would close the card / ask for a retention offer when the annual fee posts in 2023.
- The other option was the craftier solution for sure. I would pay the $95 annual fee and then wait a week or two for us to get past the 12 month window since we accepted the retention offer. This would put us in the clear to close or downgrade the card without a claw back. Plus, by downgrading her EveryDay Preferred to the no fee EveryDay card we would be eligible for a prorated refund.
We decided to go with option 2 and asked for the downgrade a few weeks after paying the annual fee. The prorated refund was for around $88. So it only cost us $7 to get out from under the card. Once the credit posted we fired up Amex chat once again and asked the rep to close the no fee card. There were no issues this time around and the account was closed a few minutes later. This freed up one of my wife’s 5 credit card slots with American Express.
Avoid Amex Annual Fee: Final Thoughts
Always remember that rules are made to be broken! Well, bent at least in this case. If you have an American Express card and it has been more than 30 days since the annual fee posted you are not completely without options. If the card has a cheaper sibling then you can still downgrade to avoid the Amex annual fee and get a prorated refund. While you will still lose some money it won’t be the Full Monty that you were looking at originally.
If you are stuck with poor timing because of an upgrade offer or retention offer, like I was, there are still options. You could even keep the no fee version open longer to appease Amex (or another card issuer). That only makes sense if you don’t need the credit card slot available though.
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Related question: Have BCP, AF posts in March, so naturally I spent $6000 between Jan-Feb to max it out before downgrading to BCE within 30 days of AF posting. But now that I have downgraded, I have not seen Feb’s cashback, not even as pending. Does moving between BCP/BCE screw with your earn cashback from posting?
Has you March statement closed yet?
Yes. Usually the cash back shows as pending by now, and after payment received it turns into payable. I have no balance owing as of march statement, and nothing pending either 🙁
I usually wait until my stuff posts to downgrade but it really shouldn’t matter. I know everything has been delayed 5-7 days right now bonus / offer wise but not earned wise. I would reach out via chat and see what they say.
There is also a Delta SkyMiles Business card that has a $55 Annual fee. I downgraded a Biz Reserve and Biz Gold to it in 2021.
Also there is a MA exception in play here that allows for pro-rated refunds 🙂
Good point – gotta love the MA rule
After jumping onto the retention offer or close panic of 2020/2021, with plenty of regret, I cannot come up with a single current card (deck of ~ 20) that would warrant closing or downgrading unless I’ve grabbed a SUB in the same card family then I’ll consider closing. With strategies I’ve gained through advice and shared experiences, every card can, and does, pay for itself.
I am sitting on around 50 right now so I have quite a few that meet the criteria haha
Nice deck, but would that be P1/P2 count? I didn’t think a P1 can come up with 50 cards without some serious duplication.
Yeah P1/P2 probably a 30/20 split. We have some we need to weed out for sure.
Wow. I’m so confused. I did not realize how complicated credit cards could be. That sounds like a whole lot of effort and energy to spend on managing credit cards. And the return is worth it?? Also I thought your credit score took a hit if you close a cc.
It is worth it for me. I was able to earn around $300 in profit from the grocery spend on the card to spend an hour or so managing this whole thing. It takes 7 years after a closure for a card to fully drop off your credit report so there isn’t an immediate hit there. It is more impactful if your utilization goes up in a meaningful way from having less credit available to you. If it is an older card then you would want to try to keep it open or if it accounts for a large portion of your credit limits etc. Otherwise I have never had much of an issue with it.
FYI…I have been an American Express card holder for 34 years. I recently contacted them to see if there was any help with the $695 fee, they offered me $150 credit. I found that to be insulting. They are not the company they once were..no longer customer driven..I’ll be making some changes..
They are all over the place with retention offers. Some people will get $500 offers while others get nothing and it doesn’t seem to be based on spending habits, loyalty etc. just totally random.
Respectfully disagree. Retention offers of 2020/2021 were a unique opportunity, and not something we should be expecting to see long-term. The decision to hold a high AF premium card has to be based on a strategy that card benefits are worth it without retention; thus the $150 is a nice bonus. I’ve never gone over the $395 AF price point, but with the knowledge I’ve gained, I believe I can make a $695 card cover most if not all of it’s AF. AMEX across the board has been great, I suspect I’m at the mid-30 years of customer point too. Their warranty extension and purchase protection support alone has probably paid for all of our AFs over the years anyway.
Does this work when you try to upgrade and cancel? I have a green, that’s passed the 30-day full refund window. I’m thinking of upgrading it to platinum(I never got the gold bonus) to get a prorated refund on the green annual fee. Of course, I will be charged a prorated platinum annual fee, but I will close the card after a couple of days(maybe right away?). So I should be getting the refund on the prorated platinum annual fee too right? Or maybe I can close it before the platinum annual fee hits?
I am not sure that it would since it is a prorated fee that would post so I am not sure what the rules would be there. It is a big gamble if you get stuck with the larger Amex Platinum annual fee. Now if you think you could use the Amex Platinum (and have already received a welcome offer on the card) I would call in and see if they have an upgrade offer to the Platinum available. I did for the Green to Gold and got a 15K offer but they had a 25K offer for the Platinum as well. Or you just eat the $95 fee and try to maximize some of the perks like Clear credit etc. / Amex Offers.
Here is my write up on it
https://milestomemories.com/amex-green-upgrade-offer/
You have to factor in the AmEx once-in-a-lifetime rule for welcome bonuses. If you downgrade to a card you have not had before you will not be eligible for a welcome bonus on that card.
That is true – if it is to a card you hope to get a bonus on in the future then you would want to factor that in as well.