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(Video) Sunday Reader Question: Should I Redeem Amex Points for Travelers Cheques?

by on October 28, 2012 · 7 comments

in American Express, Avios, Delta, Sunday Reader Questions, Video Blog Post

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This week TPG reader Steven asks for advice on how best to redeem his American Express Membership Rewards points:

“I currently have about 110,000 points in Amex. I am deciding between paying for a trip to Orlando with points or getting Amex Travelers Cheques. What is the best option, or are their other options that I am missing?”

Before I go into the various options Steve has, I’m just going to start by saying that redeeming Amex Membership Rewards points for Travelers Cheques is a terrible redemption – you only get 0.5 cents per point in value! 110,000 Amex points would only get you $550 worth.

Redeeming for travelers cheques is an atrocious value.

If you want to buy airfare through Amex’s Pay With Points program, you’ll at least get 1 cent per point in value, so $1,100 – or if you have the Platinum Card, you’ll get a 25% bonus on top of that, bringing the value of your points to $1,375.

However, the way you’ll probably get the most value out of your points – and my personal favorite method – is to take advantage of Membership Rewards’ 16 airline partners and to transfer your points to your frequent flyer program of choice. For instance, you could transfer Amex points to Delta at a 1:1 ratio, and 100,000 Delta miles will get you a roundtrip award ticket from North America to Europe in business class, which is worth a lot more than the $1,100 you’d get with Pay With Points.

Even if premium international redemptions aren’t your cup of tea, remember that British Airways is another Amex transfer partner, and BA Avios points are great for short- and mid-haul award tickets since redemptions are distance-based, and you can use Avios to book award tickets on the airline’s Oneworld alliance partners, including American Airlines – which is especially great if you live in or near an AA hub.

So for instance if you wanted to fly from New York JFK to Orlando in early December, a ticket on American would normally cost just about $220. That would require 22,000 Amex points to redeem using Pay With Points.

However, you could get the same ticket for just 15,000 British Airways Avios – so you’re already saving 7,000 Amex points per ticket.

And that’s not even taking into account the lucrative transfer bonuses Amex has been giving cardholders on transfers to British Airways – most recently 40% in September, when that ticket from JFK-MCO would only have cost you 11,000 Amex points – a really good value.

The bottom line is: definitely do not redeem your Amex points for travelers cheques. Half a cent per point in value is just too low. In my opinion, waiting for a transfer bonus to British Airways and then redeeming Avios on American is your best option for pulling the most value out of your points. That said, if you want the ability to book your flights without award blackouts, and still earn frequent flyer miles and elite status on those flights, you could consider Pay With Points, since this option is just like buying an airline ticket, only you’re using points at a fixed value of one cent each. But purely from a per-point-value perspective, I’d go with airline transfer partners and redeem your points for award tickets, where you can potentially pull a lot more value out of them.

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  • Jason

    Another week, another Reader Question that goes along the lines of:

    Reader: Should I use MR/UR points for [insert terrible redemption option]?

    TPG: No, it’s a terrible redemption. The best use is transferring to airline/hotel partners. Here’s a link to the Amex PRG/Chase SP

    Any chance you’ll answer questions that are relevant to the 99.999% of your readers who know not to redeem Ultimate Rewards points for a toaster?

  • PJ

    That is waving white flag:) try Aeroplan next to it is Avios ( I was yelling out loud for this option when there was a 50% bonus or 40 % bonus)

  • Jim

    About two years ago, I used Membership Rewards points to get a Bose Sound Dock for my iPhone. I’m still pretty happy with that purchase. I use it every day! Except it doesn’t toast bread.

  • http://twitter.com/Mileage_Update Mileage Update

    If you cant get at least 2% back then cash back CCs are certainly the best way to go. That 2% should be a floor for any “mileage earning” endeavor.

  • John

    Well, if the OP does not want to TRAVEL, then the cheque redemption is not a “terrible” option.

  • DJOOLZ

    “Delta miles will get you a roundtrip award ticket from North America to Europe in business class”. Are you kidding? I have never found a flight available for less than 300K, what am I doing wrong?

  • MYRflyer

    Steven, if you decide not to travel and must burn these amex membership reward points, I suggest converting them to gift cards, then selling those gift cards for cash. Do not have access to current exchange rates for MR, but that should get you more than 0.5 cents per point. Easiest gc’s to sell were walmart, home depot, neiman marcus, etc. Not sure what is currently being offered. Good luck

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