A treatise on American Express’s Membership Rewards

I should state up front that I love Amex.  Their service is excellent and they offer a number of partnerships that produce excellent credit cards.  In addition, their sign-up bonuses tend to be very high.

But there’s a dark side to American Express, which is their proprietary rewards program, Membership Rewards.  Note that I am not referring to cards such as the JetBlue or Starwood Amex cards, which give you rewards in somebody else’s “currency,” e.g., JetBlue’s TrueBlue points or Starwood’s SPG points.  I am referring strictly to cards like the Green, Gold and even Platinum that pay you in Membership Rewards (MR) points.

While the ubiquity of the points and the opportunities to use them may seem to be an indicator that they have value (“How can so many people be wrong about their worth?”), that perception is a result of good marketing instead of any actual value.

The best thing that you can say about MR points is that they have a lot of uses.  They can be transferred to a large number of airlines at a rate of one mile per point (with some exceptions) and can also be transferred to hotels.  But look at the transfer to Starwood, for instance.  1,000 MR points equals 333 SPG points.  But if you had the Starwood Amex card and spent $1,000, you’d get a full 1,000 points, instead of a currency that can be transferred for one-third of that number.

And in the world of “cash is king,” Amex is the jester.  If you want airline tickets or gift cards, each point is worth a penny, resulting in a mediocre 1% return.  Statement credit?  Your return drops to 0.5%.  In fact, there are virtually no products that earn you more than a 1% return on your points, with the occasional sale as an exception.

Should you avoid Amex MR cards altogether?  Absolutely not.  I’ve seen cards that offer as much as 150,000 bonus points just to sign up.  That’s a $1,500 bonus if you use your points for travel.  Not bad if you can get it.  But do you need to hold onto the card?  Probably not.

Bottom line: Be cognizant of what you are signing up for.  A program may advertise itself as the best or biggest, buy you have to determine what is best for you.  And “biggest” means nothing.  Get a cash-back card and you can buy all those items that you would overpay for from the American Express Membership Rewards catalog.

Want to subscribe? Just enter your email in the box above (and to the right) and click on the confirmation. GMailers, check your Social or Promotions boxes!

Follow me on Twitter @FFMiles101 or share with the Facebook button below.

And finally, you can apply for credit cards through the Credit Cards for Charity link above. All card proceeds are donated to charity, so please do well by doing good!

Leave a Reply

Your email address will not be published.