Amex Downgrade Rules

I have been opening, closing and product changing American Express credit cards since I was a teeny bopper. But, I guess I have never noticed this one rule. I had always kind of assumed that the Amex downgrade rules worked similar their card closure rules after all. At least in terms of the credit card annual fee refund rules. We all know American Express has some weird rules when it comes to credit card downgrades, or maybe we don't? I'll go over all of that stuff just in case, and share my recent experience on why a cancellation was better in one instance.

American Express Annual Fee Refund Rules

Let's kick this thing off talking about the Amex annual fee refund rules. We have an excellent guide that goes over every major credit card issuer's annual fee refund rules you should check out too. Also, remember to always ask for a retention offer on the account before even considering a downgrade. There may be an offer so good that you would be stupid to pass it up after all.

As for American Express, they will refund the annual fee if you cancel the card within 30 days after the annual fee hits. After that period, if you downgrade to a card with a lesser fee you will receive a prorated annual fee.

I figured that the Amex downgrade rules would offer the same 30 day window for a total refund. You know that whole saying about assuming things, don't you?

Amex Downgrade Rules Are Unique

Before we get into the American Express downgrade rules in terms of annual fees, we should first discuss the weirdness of Amex downgrades. Their downgrade rules are weird because of the unique application rules American Express has. (Yes we have a great guide for those for all banks too)

See, American Express only cares about when you last held a card. They don't actually care if you earned a bonus or not, like most other banks do. No, they only care if you have ever held the card before. Yes, that includes if you product changed into the card and never actually “signed up” for it. Because of that, if you perform a downgrade into the wrong card then you could be shortchanging yourself on a future welcome offer. You will actually need to wait 5-7 years after you finally close the card to have a shot at a sign up bonus for it again. One small misstep could cost you hundreds of thousands of points in that sense.

Don't even get me started on their family card rules either (another guide coming in hot)! Product changing into the wrong card there can cost you as well. It is always best to work bottom (no fee card) up (highest annual fee card) in every card family (Delta, Membership Rewards cards etc.). The good news is that these family rules have not made their way over to business cards, or the Hilton card family. I would still plan out my Hilton credit card applications like they were in place in case they ever roll them out. Since these rule changes have been retroactively enforced.

The Annual Fee Rules When It Comes To Downgrading Cards

Now that we know of the multitude of landmines out there for Amex applications and downgrades, let's get to the crux of my article. I recently shared how I had an amazing year of earning with the Delta Reserve card, 250,000 miles in all – without a sign up bonus being earned. At the end of the year I decided to downgrade into the Delta Blue card, which actually got me a nice little downgrade bonus offer.

I was okay doing this because carrying the Delta Reserve card already negated me from getting a bonus on any of the Delta cards below it on the pecking order, which is all of them. That is all thanks to those annoying family card rules we just discussed. Luckily, I had already earned sign up bonuses on all of the Delta cards before the family rule came out, even if that is a bad move for newbies in the miles and points world. Let's say there were no family card rules, I would have been fine downgrading to the Delta Blue card because I would never sign up for it straight away. The welcome offer is never enticing enough to make it worth the hard pull or a 5/24 slot.

My Experience

Once I downgraded I expected to be refunded for the entirety of the Delta Reserve annual fee. I was well within the 30 day window where you get the full refund from a cancellation after all. Why would this work any differently? Well, it did. The cool thing about downgrades is that American Express will always prorate the annual fee, even when you are outside the 30 day cancellation window. That allows you to still recoup a chunk of your annual fee if you are late to pull the trigger, or if your situation changes. The problem is that it also works that way within the 30 day window too. From the photo above, you can see I was charged a few dollars in the transition. If you plan to downgrade, then be quick and do it the day the annual fee posts.

Amex Downgrade Rules: ToP Thoughts

The thing I love about miles and points is that there is always something to learn. Even after doing this for 15 years I am still learning something new every single day. That is true even if it is a rule that has likely been around forever, like this Amex downgrade rule in terms of how annual fees are treated. I had always just assumed it would work like a credit card closure, and that the 30 day full refund window was in place. That is not the case though, so you want to act quickly if you plan to downgrade your American Express card. Just be sure to avoid all of the landmines that the process can entail.

Let me know if you have run into something similar in the ToP Facebook Group.