Are you considering transferring American Express Membership Rewards points to a US airline? You may want to take advantage of this solution to transfer your Amex points to the Alaska Airlines Mileage Plan.
Note: You have to pay excise tax offset fee. Here’s an explanation of how it works – and how to book domestic flights without paying these pesky fees.
What is excise tax and how does Amex charge for it?
The IRS defines excise taxes as “imposed on certain goods, services and activities” — including certain transactions related to loyalty programs. You’ll often see them when buying points or miles directly from airlines, but they also come into play with Transferred Points Currencies.
To account for this tax, American Express imposes an “excise tax offset fee” when transferring membership rewards points to US airline loyalty programs. Here’s how it’s described on Amex’s website:
“Each time you transfer points to the US Airline Frequent Flyer Program, an excise tax offset fee of $0.0006 per point (with a maximum fee of $99) will be charged to your linked card account. We charge this fee to offset federal excise tax. .pay when you transfer points.”
As noted, this fee only applies to US airlines’ frequent flyer programs. For Amex, this includes three programs:
This fee will not be charged on transfers to hotel partners and international airline programs.
Related: American Express Membership Rewards Transfer Partners: Maximize Your Points
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What does excise tax offset fee look like?
When transferring to a US frequent flyer program like Delta SkyMiles, Amex will prompt you for the excise tax offset fee.
In this example, you would need to pay a $30 fee to transfer 50,000 Amex points to Delta SkyMiles. You can also use your points to cover excise tax offset fees, but this isn’t a good use of your hard-earned rewards. By using 6,000 points to avoid the $30 fee, you’ll redeem each point for just half a cent, or one quarter of our September 2024 Valuation of Amex Points.
How you can avoid fees
As noted above, this fee is charged only on transfers to Amex’s three transfer partners. If you convert your Membership Rewards points to hotel program currency, they will not be charged. But most importantly, it also doesn’t charge for transfers to international airline loyalty programs — and you can often use it to book domestic flights.
For example, if a reward is available, you can use it Virgin Atlantic Flying Club Points on Delta Air Lines and Hawaiian Airlines. Plus, JetBlue TrueBlue is a revenue-based loyalty program, so you might want to crunch the numbers and see if booking those flights through American Express Travel makes more sense. After all, they count as paid tickets and are therefore eligible for rewards.
Finally, it’s worth noting that no other transferable points program charges a fee for this transfer. If you have points with Citi ThankYou Rewards or Chase Ultimate Rewards points, for example, you can transfer them to JetBlue at no extra charge.
The bottom line
Most of the time, it doesn’t make sense to transfer Amex points to Delta, Hawaiian, or JetBlue, especially since there is an excise tax on these point transfers. Additionally, neither program offers fantastic value for your rewards.
We recommend doing this only when you’re short on redemptions and want to top off your account with just a few thousand points or miles — or transfer your Amex points to Hawaiian Airlines and then to Alaska Airlines. Even then, make sure to pay the excise tax offset fee with you American Express card, because redeeming Amex points this way is a terrible value.
Otherwise, stick with a hotel or international loyalty program, as those are the best ways to maximize your Membership Rewards points.
Related: How to Redeem American Express Membership Rewards for Maximum Value