Quick hit: how American Express cards treat refunds towards annual spend thresholds

Late last year I tried to take advantage of an increased portal payout at an online merchant by buying a few thousand dollars of electronics which, if the portal had tracked and paid out properly, I planned to then resell.

The portal ultimately didn't track or pay out properly, so I returned the merchandise this month and found an interesting nuance to how American Express treats returns when calculating annual spend thresholds.

Returns count against your annual spend in the calendar year of the return, not the purchase

In many ways this should be obvious: your annual spend is calculated based on "net purchases," or purchases minus returns and credits (including OPEN small business savings and Amex Offers for You) during each calendar year. So, in my case, my roughly $8,000 in January, 2017, purchases were reduced by my roughly $2,000 in returns when American Express calculated my 2017 year-to-date net purchases.

On the other hand, this is noteworthy because this is not how spend towards signup bonuses is treated: if you make $3,000 in purchases in the first 90 days of card membership, then return $3,000 in merchandise on the 91st day, you may find that your signup bonus is "clawed back" by the credit card issuer, as this FlyerTalker found in May of last year.

This is lightly gameable

Under most circumstances this won't matter, since if you meet a high annual spend threshold each calendar year, any returned amount will simply have to be spent in the year of the return. For example, my $2,000 in returned purchases means I need to spend $52,000, not $50,000, in 2017 in order to earn my 20,000 Medallion Qualifying Miles with my Platinum Delta SkyMiles Business card.

On the other hand, if you are no longer getting enough value from an American Express card to justify paying the annual fee year after year, but want to maximize the card's value while you still have it, you could storm the spend threshold by the end of a calendar year, triggering any relevant bonus (waived Medallion Qualifying Dollar requirements and Hilton HHonors Diamond elite status, for instance), then return the merchandise the next calendar year before cancelling the credit card.