A reader wants to know how American Express prorated annual fee refund works after learning that she can downgrade her American Express Marriott Bonvoy Brilliant Card to a $95 annual fee Marriott card, keep the Marriott 85K ree Night Certificate and receive Amex prorated annual fee refund

In this post, I want to point out Amex's annual fee refund policy and address how Amex prorated annual fee refund is calculated so that you can plan accordingly when you decide to cancel or downgrade an American Express card. 

How Amex Prorated Annual Fee Refund Policy Works?
Photo Credit: American Express
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    Amex Annual Fee Refund Policy

    First, it helps to understand the Annual Fee Refund Policy set by American Express

    American Express clarifies that the card's annual fee can only be refunded within 30 days of the statement closing date if you cancel an Amex card. After that, you will not receive any annual fee refund for a card's cancellation. However, you can receive a prorated annual fee if you downgrade the card instead of canceling the card. 

    Here's the Amex annual fee refund policy:
    You must close or downgrade your card within 30 days of the statement closing date in order to receive a full refund of the annual fee. Thereafter, the only way to receive any type of refund is to downgrade and receive a prorated refund.

    How Does Amex Calculate the Prorated Annual Fee Refund?

    Should you decide to downgrade a high annual fee Amex card to a lower or zero annual fee Amex card, you can receive a prorated annual fee refund from American Express. 

    Two important dates you need to calculate the Amex prorated annual fee:
    • When the card's annual fee is posted.
    • When you product change or downgrade the card.

    To illustrate this better, let's use an example: 

    You have an Amex card with a $95 annual fee and wish to downgrade it to a no-annual-fee card. 
    • The $95 annual fee is posted on January 1st.
    • You downgrade the card on January 15th.
    • You owe Amex $3.64 and receive a refund statement credit of $91.36.

    The math is this:
    • You use the annual fee of $95 divided by 365 days = $0.26 per day. 
    • From the example above, it is 14 days between the date the annual fee is posted and the date you request to downgrade the card. Therefore, you use 14 x $0.26 = $3.64
    • $95 - $3.64 = $91.36 refund. 

    How to Get A Full Amex Annual Fee Refund?

    • Be sure to cancel the card within 30 days of the statement closing date after the annual fee is posted. 
    • Be sure to downgrade the card before the annual fee is posted. 

    However, be careful of canceling or downgrading sooner than the annual fee is posted if you receive the card's welcome bonus, whether it's a new application, retention, or upgrade offer. Amex makes it clear in its terms and conditions:

    If we, in our sole discretion, determine that you have engaged in abuse, misuse, or gaming in connection with this offer in any way or that you intend to do so (for example, if you applied for one or more cards to obtain an 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, we may freeze, or we may take away Membership Rewards® points from your account. We may also cancel this Card account and other Card accounts you may have with us.

    Canceling Amex Card Before Annual Fee

    While you can cancel your Amex card before the annual fee is posted to your account, it's unnecessary because it poses more risks than not, especially if you received the card's bonus points offer. See above How to Get A Full Amex Annual Fee Refund?

    You can receive a full annual fee refund for a card's closure or cancellation if you request the cancellation within 30 days of the statement closing date after the annual fee is posted. After that, you will not receive any refund unless you downgrade the card, subject to the card's availability for product change.