The American Express Rewards Abuse Team (RAT) is cracking down on more cardholders who are getting signup bonuses and then canceling cards. This has been the case for a while now, as there’s previously been many reports that canceling or downgrading a card within few months will result in bonus being clawed back. But more recent data points show that even canceling after 11 months will still negate the bonus.
The reason people cancel their cards or downgrade the cards soon after receiving a bonus is to save on the annual fee. Some American Express cards have huge annual fees and if you do not use the card for the whole year, you get a prorated refund. So if you cancel after three months for example, you only pay a quarter of the annual fee. This causes a loss for American Express, as cardholders get to cash in all the perks of the card and only pay part of the annual fee.
It’s even stated in their terms:
If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome bonus offer in any way or that you intend to do so (for example, if you applied for one or more cards to obtain a welcome bonus offer(s) that we did not intend for you; if you cancel or downgrade your account within 12 months after acquiring it; or if you cancel or return purchases you made to meet the Threshold Amount), we may not credit the welcome bonus to, we may freeze the welcome bonus credited to, or we may take away the welcome bonus from your account.
American Express will refund the whole annual fee if you cancel within a month of being charged. So the best way to go with Amex cards that have a high annual fee, is to wait for 12 months and then cancel withing 30 days of the new card membership year. It’s really not worth it in my opinion to risk losing a bonus or even worse, get blacklisted by American Express. These new data points show that their RAT team is cracking down on such abuse, so being on the safe side is the best way to go.
Let me know if you have had similar issues with bonuses after closing or downgrading n account.