Depending on your purchase patterns, the new Amex Everyday Preferred card may be a better Membership Rewards points-earning card than the Premier Rewards Gold (since it has bonus categories but also a 50% bonus on all points earned with 30 swipes in a month).
The one really valuable use for Membership Rewards points is transfers to airline miles. For instance,
- they partner with Singapore Airlines and Singapore offers outstanding premium cabin award availability to their own Krisflyer members (albeit with fuel surcharges).
- they partner with ANA whose distance-based award chart can be extremely valuable, including business class JFK – London roundtrip for just 63,000 points (again, with fuel surcharges).
There are millions of things you can do with Membership Rewards points. Most of those things are bad.
With the Everyday card, they’ve found much greater marketing resonance among their target consumer market by not focusing on high value travel redemptions, but on achievable, concrete, practical items to help cover the costs of everyday life.
Here’s What Miles Are Good For.. And Why
Airline miles for good for air travel. Hotel points are good for hotel awards, except that Starwood Preferred Guest Starpoints are great for airline mileage transfers.
Flexible points currencies that transfer at a good (generally, one-to-one or better) rate to airline miles are best for transfers to airline miles.Hotel points transfers are never as good a deal.
Here’s why: the economic model of airline saver awards is that the airline effectively sells distressed inventory at a discount to the frequent flyer program, and in mass quantities. That means the frequent flyer program can get a whole lot more value for its rebate investment than using the same rebate/expense in another way.
Hotel programs charge more per point, because their costs are higher, generally speaking a hotel program will give you any available standard room for their points and that can be a costly redemption.
In contrast an airline saver award is going to be for space the airline expects not to be able to sell.
If an airline buys you a $300 appliance, it is going to cost the airline close to $300. Sure, there may be a discount arrangement based on quantities purchased, but the discount isn’t going to materially change the economics of the arrangement.
In contrast, a saver economy seat on a plane might cost the program less than $30. There’s not just a rebate in the form of an airline seat, there’s also leverage.
I almost feel badly for Capital One, they actually invest more than most credit card programs in rewarding their customers — and yet without the leverage afforded by an airline co-brand relationship that investment isn’t leveraged, and as a result in general provides less value since they aren’t pairing their rebate with the ability to buy distressed inventory in bulk.
Don’t Ever Spend Miles for Merchandise
Never use miles for merchandise.
The frequent flyer program programs have to buy the merchandise and without nearly the sort of discount they get on their own products.
Aeroplan used to offer LCD toasters for 10,000 miles each, and towels for 24,000 miles. Blenders might run 25,000 miles.
A domestic coach saver award ticket might cost a frequent flyer program less than $30. But if you’re going to redeem the same 25,000 miles for merchandise they’re going to have to buy that merchandise.
The program is actually stretching, in some sense being generous, if you get an item that retails for $89 — even though it doesn’t seem like a very good deal to you since the same 25,000 miles could buy you a cross country ticket that would have been priced at $500 or you could have saved your miles and spend 100,000 to go business class to Europe (perhaps $8000).
I don’t often suggest using 25,000 miles for a domestic coach award because it isn’t a very good value. But it’s even worse when using the points for merchandise. 25,000 Aeroplan points will buy you a KitchenAid 5-speed Diamond Blender.
Overstock has it for $63. And you can earn points or cash rebates on your Overstock purchases.
That’s about 1/4th of one cent per mile in value.
Ok, I Give You This Limited Excuse
If you have a small number of miles in an account — and I usually suggest earning more rather than cashing out — it can make sense to redeem if you believe you won’t earn more.
I had about 4500 Etihad Guest miles and no particular expectation that I would build that balance. And I needed a new wallet. Etihad has some of the most extensive miles for merchandise redemption options.
Still, a new wallet is hardly a reason to remain loyal. Miles have been able to give me the sort of travel and experiences that I would never be able to afford in my entirely life. I travel more, and well beyond my means, because I’ve had access to these programs. I’d never trade them for merchandise, not even a lawn gargoyle.
The Only Other Great Value Redemption
Miles for experiences can be a good deal, something for which there’s not a ready market price.
When you’re leveraging the connections, the sponsorship, or other clout that a multibillion-dollar business has to open doors you can’t open on your own there tends to be much greater value.
Chase Ultimate Rewards offers this, there’s Citi PrivatePass and American Express has long offered cardholder events.
Starwood has some great auctions, there are real deals to be had because it seems like not enough people know about them, there’s not a critical mass of bidders so these auctions don’t suffer from the “winner’s curse” (where anyone winning necessarily overpays because all other bidders don’t go that high for a reason).
These redemptions aren’t always cheap, but they can be for things you couldn’t buy yourself.. opening the door to experiences.
But What If You Don’t WANT Air Travel or Experience Rewards?
Second, for your other points, you should still redeem those for travel not LCD toasters. Just maybe redeem them for other folks’ travel, friends and family who would otherwise be buying tickets or as gifts for the holidays they might be treated to business class instead of economy.
I get that someone with an unlimited flight pass purchased for a song in the 1980’s has no reason to redeem for their own travel but earns miles, the more they fly, and to the extent these can be used for gift cards they’re effectively paying themselves to fly. I suppose that can make sense. But it’s this sort of extreme limit before it does make sense that illustrates that the rest of us aren’t in that situation – and just shouldn’t do it.