The American Express Membership Rewards (MR) program is a well known reward programs in today’s credit card marketplace … but the value of any rewards scheme lies in redeeming earned points efficiently and maximizing their value! The Membership Rewards catalog offers values ranging from low to high depending on your situation and preferences so it’s important to redeem with care.
A penny a point is the generally accepted value to achieve when redeeming Membership Rewards points. With American Express Membership Rewards, your points can be worth anywhere from half a cent, all the way up to 2 cents per point or more each. Below is a synopsis of the options you will find in the MR catalog.
1. Converting points to frequent flier miles and hotel loyalty points
It’s worth noting that this is a different process than the “Pay With Points” travel option (which will be covered in a bit). With all of the various Amex Membership Rewards cards (such as the Premier Rewards Gold and Platinum Card and, most recently, the new Everyday cards), you have the ability to transfer points to more than 20 popular frequent flier and hotel loyalty programs, which is a very valuable and flexible aspect of this rewards program.
The unique about the Membership Rewards program is…
- American Express by far has the most airline and hotel redemption partners. Other rewards programs (Chase Ultimate Rewards, for example) allows transfer points of UR points to their somewhat smaller number of participating travel loyalty programs within the Ultimate Rewards program. But AmEx easily has the most transfer partners, providing you with a broader array of options. You can transfer your points to 17 different airline frequent flier programs and four hotel loyalty programs.
- Most conversions are on a 1:1 basis. With most of the partners, every point you transfer equals a mile (so there is absolutely no dilution in the points value). That being said, some frequent flier programs are more valuable than others. For example, Delta’s SkyMiles are often called “SkyPesos” because they aren’t as valuable as say, United MileagePlus or American AAdvantage miles.
Depending on which program you convert to, there is the possibility of realizing more than 1 cent per mile, which is the holy grail of rewards gurus. For example with Virgin America, each Elevate point can be worth a whopping 2.2 cents – that’s about as good as it gets in the bang for the buck world of points redemption.
However, there are some drawbacks…
- Some airlines have bailed out of the MR program in the past year or so. Most notably, United Airlines said adios, which was a major blow to American Express rewards travel.
- Amex is hearing footsteps…Chase is becoming ever more competitive with their cards and Ultimate Rewards program. With the Chase Sapphire Preferred card ($95 annual fee) you also have the ability to convert to partner airlines on a 1:1 basis. Granted, the selection is not quite as large (at only about 50% of American Express’ partner list) but if you travel domestically, many argue the selection is better since it includes United, Southwest and British Airways (the latter of which can be used as a back door to book American Airlines flights). So depending on your preferred carrier, sometimes the Sapphire Preferred is worth a look.
2. “Pay With Points” for travel
If the airline of your choice isn’t a Membership Rewards transfer partner, you can still use your rewards to pay for the flight. However, the American Express Pay With Points value will vary, depending on the travel type and partner involved. Below are the estimated conversion rates:
Airfare: 100 pts = $1.00 worth (that’s $0.01 for each point)
Hotels, Cruises: 133 pts = $1.00 worth (that’s $0.0075 for each point)
Hotel + Airfare Combined: 117 pts = $1.00 worth (that’s $0.0085 for each point) As you see, you get better points conversion value with straight airfare redemption. As with other credit cards, the reason they say you can “fly any airline, anytime, anywhere with no blackout dates” is because we’re not talking frequent flier miles here. Rather, the number of points needed will correlate with whatever the discounted cash price the card company can negotiate and purchase a ticket on your behalf.
So how does the Pay With Points Work? How do you use it? It’s quite simple – you just have to book the travel through the American Express website. Don’t worry, the prices are NOT inflated (it’s actually powered by Orbitz).
When you get to the checkout page, you can pay for all or just some of the price using your Membership Rewards points. It’s advised to only this for airfare, since the hotels and cruises have a much less valuable conversion ratio.
If you plan on regularly using this redemption option then you may be better off with the Venture Rewards card from Capital One. That gives you a value of one cent per “mile” regardless of the type of travel you spend the “miles” on (you can use them on more than just airfare). Plus it pays you double miles on all purchases.
3. Gift cards from partners
Redeeming points for gift cards from partner retailers is usually a safe bet, because most of the options will give you a full 1-cent-per-point value. For example, 2,500 points will get you a $25 Kohl’s gift card. Or use 5,000 for a $50 card. The selection is comparable to many credit card programs, featuring the usual retail options like Home Depot, Old Navy, Victoria’s Secret, etc. and a plethora of popular restaurants. Then of course, since we’re talking American Express here, there are some upscale options like Tiffany & Co, Tourneau and even Mercedes Benz certificates for $1,000 off a lease or purchase. But not all of the partner gift cards are a good deal like the ones mentioned above. For example with Marriott (pictured right) you get only about 0.83 cents per point. The hotels usually take a cut of the pie in these cases, so that’s why the conversion value dips below one cent.
4. American Express gift cards & travelers cheques
These are perhaps the worst redemption options in the AmEx rewards catalog. Why? Because the value you get is only a half a cent per point. Their Gift Cheques and Travelers Cheques have the same conversion rate. Even if you go for higher amounts, the value doesn’t get any better – i.e. $500 Travelers Cheque = 100,000 points. Conclusion? Even though plenty of benefits and convenience come with their gift cards/checks, this isn’t the best tactic for wringing maximum value out of your hard-eaned Membership Rewards points. You’re better off with almost anything else they offer.
5. Statement credits
Can you use Membership Reward points to pay your bill? Yes and no. You can redeem Membership Rewards points to offset eligible purchases and receive a statement credit in return. Is it recommended to go this route? Nope. Because the value is only 0.6 cents per point (4,167 pts = $25 statement credit).
The Membership Rewards merchandise catalog is hard to beat. There are about 2 million different products you can buy! But what value are you getting in return? How much are AmEx points worth for merchandise? Well the answer will vary, depending on the merchant, but as a rule of thumb you should expect around a 50 percent haircut (so you’re getting about a half cent for each point). For example, here’s a look at an Apple iPad’s cost in points vs. cash price: On the bright side, sometimes there are promotions where they knock of the number of points required… but even then it may not be the best deal. Merchandise redemption is a fertile area for the card companies to inflate the value (i.e. dilute point value) and obscure the value equation with the customer.
7. Using AmEx points on Amazon
A few years ago the New York Times ran a story about the conversion of AmEx rewards points for Amazon purchases. It wasn’t exactly a glowing review. Why? Because with every 1,000 points equaling only $7 towards an Amazon.com purchase, it’s a poor choice for redemption.
So, at the risk of sounding like a broken record, this will be kept brief… it’s another one of those half-cent-per-point conversions.
And the winner is…
…clearly your best move is to redeem for free or discounted travel. Despite the drawbacks of all the other options, American Express Membership Rewards remains one of the most popular programs due to them having the largest selection for frequent flier mile and hotel point conversion opportunities. If you don’t travel, then the runner-up will be the partner gift cards which usually will net you 1 cent per point. As far as the other options? I would say avoid them and just bank your MR points until you get a chance to get full value through travel redemption. Really the Membership Rewards program is best suited for travelers. If that’s not you, then it may not be worth paying the annual fees for one of their premium charge cards. Instead, I would recommend you look into an AmEx credit card which gives straight-up cash back.