cnn.com
Membership Rewards is the name of the points-based award-earning system for certain American Express credit cards. American Express offers airline cards, hotel cards, cashback cards, and Membership Rewards (MR) cards. Their current MR-earning cards are:
The Platinum Card (and all variants)
The Business Platinum Card
Gold Card
Business Gold Card
Green Card
Business Green Card
Amex Everyday
Amex Everyday Preferred
Blue
Blue Business Plus
Amongst these cards, there is a wide array of options in terms of target customer, annual fee, and earning rates. Annual fees range from $0 for the Amex Everyday, Blue, and Blue Business Plus, up to $695 for the Platinum cards. Bonus earning categories cover airfare, “travel,” transit, dining, groceries, gas, shipping, cable and internet, and advertising.
All of the cards above offer a signup bonus, and are also subject to American Express’s once in a lifetime rule for said bonuses (you can only get the bonus for each card once in your lifetime and can't sign up for the card multiple times). There are regularly offers for the Platinum or Business Platinum cards for 100,000 points or more, with the Business Platinum currently offering a whopping 150,000 MR points for signing up and meeting the hefty spending requirement (so you would have at least 165,000 MR points after spending the $15,000 to get the bonus). As we’ll dive into later, 150,000 points is worth at least $1,500, but can be worth $3,000 or more for high-end redemptions.
So what would one do with a couple hundred thousand MR points? The simplest redemption option is to pay with points for various purchases, such as paying towards the balance on your credit card. This is a terrible value for points, and I strongly recommend against it, because there are much more efficient and effective systems if your goal is cash back or offsetting regular purchases. Points are only worth 0.6 cents each when redeeming as a statement credit. This makes a massive 100,000 points signup bonus “only” worth $600, less than the annual fee for the Platinum Card. My goal is to at least triple that value.
Another way to use MR points is to book travel via the American Express Travel portal, which is like other travel comparison sites. Here, the value is a flat 1 cent per point, and in my opinion, this should be the absolute floor for value from MR points. To book travel, log into American Express, navigate to the Membership Rewards home, and find Redeem for Travel, which will then bring you the option(s) to search and book travel. This is an okay redemption option, but if your goal is to maximize the MR point redemption value , I still think there is a better system available for you.
The real value for MR points comes through transferring them to partners. American Express currently has the following transfer partners, all at a 1:1 ratio unless otherwise noted:
Transfers work with American Express basically buying millions of loyalty points in bulk, and then exchanging them for your MR points when you initiate a transfer. They will be deposited into your selected loyalty account, so you need to have an account with the transfer partner target before transferring. All of these transfers are one way only; if you say you want to transfer 124,000 points from MR to Emirates Skyward, you will lose 124,000 MR points and gain 124,000 miles in your Skyward account. Skyward doesn’t offer a transfer to MR points, so there is no way to transfer them back.
emirates.com
I used the example of 124,000 points transferred to Emirates, because it’s a great example of a redemption we recently used. 124,000 points, plus about $260 in taxes and fees was enough to book a one-way business class ticket from LAX to MLE (Male, Maldives) with a connection in DXB (Dubai). This ticket would normally cost over $6,000. To determine the value of the points, you can use the following formula:
( [ticket cash price**] - [reward taxes and fees] ) * 100 / [points used]
**alternatively, you can use what you would reasonably be willing to pay for the ticket, rather than just what the airlines charges other people for it. Just because someone else will pay $6,000 for a seat on a plane for 20 hours, maybe you scoff at that and would only ever pay half that, no matter how amazing the seat and plane are. If that’s the case, you can use $3,000 as the cash price and run the calculation.
In this case, ($6,000-$260)*100/124,000 = 4.6 cents per point! This compares to the 0.6 to 1.0 point exchange discussed earlier.
Over time, with some redemptions like this one on Emirates, other partners, and maybe some fill-in travel booked on the Amex Travel portal, we strive to keep the average value of these points well over 2 cents each for redemptions. The more points we accumulate, the easier it is to achieve this benchmark value (getting more than $20 of value from 2,000 points is honestly pretty difficult). However, both for the convenience of easy math and since we aren’t in a position to pay $6,000 per person for the outbound leg of a single vacation, I don’t like to use a value higher than 2 cents when determining the value of MR points in general. I’m comfortable saying we can consistently get at least 2 cents of value from MR points over the long run, and you can too!
This article includes credit card referral links, which provide us card benefits when used, with no cost to you.
Using these links supports our blog and allows us to keep bringing you new content.
Comments