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Update: The offer mentioned below for the Platinum Card from American Express has expired. View the current offer here.
This is another installment in my Maximizing Amex series where I examine the benefits of American Express cards and Amex’s Membership Rewards Program. The articles include; Post 1: Understanding the Card Offering. Post 2: Understanding Membership Rewards. Post 3: Understanding Transfer Bonuses. Post 4: Platinum Card Review. Post 5: SkyTeam Transfer Partners. Post 6: Oneworld Transfer Partners. Post 7: Star Alliance Transfer Partners. Post 8:Understanding Emergency Travel Assistance and Travel Accident Insurance. Post 9: Purchase and Return Protection and Extended Warranty. Post 10: Car Rental Benefits. Post 11: Gold and Premier Rewards Gold Card Comparison.
As I highlighted yesterday, transfers to airline frequent flyer programs are usually the most valuable use of Membership Rewards points (remember: Membership Rewards Express account cannot transfer points to frequent flyer/guest programs). The other really great thing about Membership Rewards points is that they generally transfer instantly. This allows for huge flexibility, because you can wait until you absolutely need to use miles before transferring them. I generally recommend confirming that award space is available in a program immediately before transferring.
However, the one main exception to the “hold onto your points until you need to use them” advice is when there are lucrative transfer bonuses. Transfer bonuses range, but are generally between 10% and 40%. When they become really lucrative, it can make sense to transfer your points prematurely, simply because a good bonus is too good to pass up. And as much as we try to predict what will happen in the future, no one really knows if future bonuses will be run and even if they d0, who knows if they will be more or less lucrative. The best you can do is understand the history of bonuses so you get a sense of what is reasonable to expect, which is the point of this post.
You might be thinking to yourself, “Why would an airline/hotel want to have a transfer bonus?” Well the simple reason is that American Express pays each partner for the miles/points. I don’t know what the rate is, but if you decide to use 100,000 Amex points and transfer them to Delta, Amex will pay Delta say, $700. So who makes out on this deal? In an ideal situation, everyone.
Amex makes out because in general, 100,000 points = $100,000 or so in spend on your card. Without factoring in late fees or annual fees, Amex charges a ~3% transaction fee to each merchant who accepted your payment. So basically, they made $3,000 from merchants because you used an Amex card. Not only that, they are happy that you are happy being able to transfer your points and book a trip that saves you money.
Delta gets paid $700 and let’s you redeem for award seats that very well could have gone out empty anyway, so that’s extra cash in their pocket. In fact, you may even book an award trip and decide to change or cancel it and they pick up another $150. Or you pay $25 for checked luggage. Or decide to use miles for one ticket and pay for the other – thus bringing them more business and filling more seats.
You make out because you are smart and follow thepointsguy.com and know how to maximize the value of your points. You leverage the current 50% transfer bonus, so those 100,000 points actually become 150,000 points and 25,000 Medallion Qualifying (elite) Miles and you turn around and redeem them for a business class trip to Australia on partner V Australia. An $8,000 ticket for 100,000 Amex points – you just made out like a bandit!
So let’s analyze current transfer bonuses. There are two types of bonuses a) Registration required (usually through a link from the airline/hotel) b) hard-coded, where the actual transfer ratio in membershiprewards.com is altered.
Delta- is by far the most common promoter of transfer bonuses. In fact, right now they have three bonuses running! It’s rare they don’t have one running so I always recommend waiting for a transfer bonus, because usually the wait is only a matter of weeks. Generally Delta transfer bonuses require registration, but post instantly. Sometimes they may take weeks/months to post, which can be frustrating so as a best practice, I recommend signing up for a transfer bonus and then letting it propagate overnight. The next day, you should see it reflecting in your Delta account under Delta.com -> Skymiles -> Manage My Account ->View Your SkyMiles Promotions
50% Bonus and 25,000 Medallion Qualifying Miles until 5/31/11 when you make a single transfer of at least 50,000 points. This is one of the best transfer bonuses I’ve ever seen. It ran for the first time in the fall of 2010 and if you took advantage of it then, you are ineligible to do so with this run through. So if you transfer 50,000 Amex points, you’ll end up with 75,000 SkyMiles (enough for business class to Hawaii) and 25,000 Medallion Qualifying Miles which will get you Silver Medallion status (domestic first class upgrades, free checked bags, free exit row/priority seating, 25% mileage bonus and better customer service) until February 2013. I will admit, being the lowest elite level, the domestic first class upgrades will be sparse, but the other benefits can save you major money and hassle. If you don’t have 25,000 Amex points, you can get that many just for signing up for a $450 Amex Platinum card, which might make sense since you get a ton of other benefits as well (which I’ll be highlighting in a future post).
40% Bonus until June 30, 2011 when you transfer 100,000 or more points
25% Bonus until June 30, 2011 when you transfer less than 100,000 points
Airtran– 25% discount until April 30, 2011. This is hardcoded.
Delta: 30% 50% 20,000 Point Rebate 04 $250 Gift Cards, 20%, 15%, 25%, 30%, 20%, 30%, 20%, 35%, 15%
British Airways (Generally hard-coded): 40%, 30%, 20% for Platinum/Centurion, 5,000 Point Bonus
Virgin Atlantic: 15%, 15%,
El Al: 25%
Continental: 25% (2002)
Starwood: 50%, 50%, 50%,
Premier Rewards Gold Card from American Express
|Intro APR||Regular APR||Annual Fee||Balance Transfer||Credit Rating|
|N/A||Introductory annual fee of $0 for the first year, then $195||See Terms||Excellent Credit|