⚠ Easier Redemption Costs MoreModerate threat

American Express (AXP) — threat to the moat

Amex is making its points easier to spend, and every point spent is a point its accounts had hoped someone would forget.

Loyalty programmes earn part of their economics from points that are never used. American Express's own estimate is that 96% of points will be redeemed1, which leaves little room, and the company has been making redemption easier.

Card Member rewards expense ($M)11,007202114,002202215,367202316,599202418,4092025American Express Forms 10-K FY2023 and FY2025
Rewards expense rose 67% in four years.

In the second quarter of 2026 it enabled Membership Rewards points redemption for U.S. Card Members checking out with Apple Pay2. It introduced new travel benefits for Delta SkyMiles Card Members and a partnership with ALL Accor3. Each of these makes points more useful, which is good for engagement and bad for breakage.

The accounting is sensitive to exactly this. Amex says a 25-basis-point rise in the redemption rate would raise the liability and rewards expense by about $229 million4. A cardholder who used to let a small balance lapse and now spends it at the checkout moves that rate.

The cost per point matters too. When points are spent on travel through partners, the cost depends on what Amex pays the airline or hotel; when they are spent as statement credits, the cost is fixed. A one-basis-point rise in the weighted average cost per point would add about $244 million5.

The programme is also being opened to more places to spend. Amex became the official payments partner of Fanatics across select online and retail locations in the second quarter of 20266, one more merchant relationship through which points and offers can be used.

Rewards expense was $18,409 million in 20257 and $5,051 million in the second quarter of 20268. A disclosed redemption rate of 97% in a future annual report would be the clearest sign that easier redemption had begun to cost real money.

References
  1. ReportedAmerican Express's own estimate is that 96% of points will be redeemed, which leaves little room, and the company has been making redemption easier.
    American Express Form 10-K for fiscal 2025 - Card Member rewards, Membership Rewards liability, business development and Card Member services. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedIn the second quarter of 2026 it enabled Membership Rewards points redemption for U.S. Card Members checking out with Apple Pay.
    American Express second-quarter 2026 earnings release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedIt introduced new travel benefits for Delta SkyMiles Card Members and a partnership with ALL Accor.
    American Express second-quarter 2026 earnings release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 24 July 2026 · source ↗
  4. ReportedAmex says a 25-basis-point rise in the redemption rate would raise the liability and rewards expense by about $229 million.
    American Express Form 10-K for fiscal 2025 - Card Member rewards, Membership Rewards liability, business development and Card Member services. — FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedA one-basis-point rise in the weighted average cost per point would add about $244 million.
    American Express Form 10-K for fiscal 2025 - Card Member rewards, Membership Rewards liability, business development and Card Member services. — FY2025 · publ. 6 February 2026 · source ↗
  6. ReportedAmex became the official payments partner of Fanatics across select online and retail locations in the second quarter of 2026, one more merchant relationship through which points and offers can be used.
    American Express second-quarter 2026 earnings release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 24 July 2026 · source ↗
  7. ReportedRewards expense was $18,409 million in 2025 and $5,051 million in the second quarter of 2026.
    American Express Form 10-K for fiscal 2025 - Card Member rewards, Membership Rewards liability, business development and Card Member services. — FY2025 · publ. 6 February 2026 · source ↗
  8. ReportedRewards expense was $18,409 million in 2025 and $5,051 million in the second quarter of 2026.
    American Express second-quarter 2026 statistical supplement, Form 8-K exhibit 99.2 - segment results, card metrics, capital and credit - consolidated results, card metrics, capital and credit. — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 28, 2026