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Last fall, many points and miles enthusiasts were very pleasantly surprised to learn of a new offer from American Express. Beginning October 2016, customers with The Business Platinum Card from American Express OPEN could receive a 50% rebate on any points redeemed for business or first-class travel on any airline, or economy flights booked on the same carrier cardholders selected for their annual $200 airline fee credit.
A Deal Too Good to Be True
I just happened to be a cardholder, so I began taking advantage right away — my first booking was for an economy United ticket from the US to Australia and back from Hong Kong for my girlfriend to join me on a trip for $1,768, booked in the upgradeable “V” fare class. After my 50% rebate posted, my total for the flight came to just 88,400 Membership Rewards points. Since it was a revenue ticket, I was able to apply Global Premier Upgrades to upgrade the entire trip, and she earned miles and elite credit as well.
This new Membership Rewards redemption option was so lucrative that TPG began booking revenue tickets for employees instead of redeeming miles — a win all around, since travelers earn miles and elite credit for their flights and Amex bookings are far more flexible (in that you aren’t at the mercy of award space). As a result, TPG even ended up raising his valuation of Amex points from 1.9 cents to 2.0 cents apiece.
Honestly, this perk felt like it was too good to be true. Given how much the TPG staff alone had taken advantage, it seemed like it couldn’t be sustainable on Amex’s end, and, almost as quickly as it had appeared last October, the benefit was devalued in June.
Fortunately, customers who signed up for a new Business Platinum Card (or upgraded another card) between October 6, 2016 and May 31, 2017 will continue to receive the 50% rebate with no cap for one year from the date the card was issued. Since I had upgraded my Business Gold Rewards Card to Platinum in April, I’m still eligible for the 50% rebate through April 2018. But what about cardholders who opened or upgrade accounts prior to October 6, 2016 or after May 31 of this year? Is the benefit still worth taking advantage of with a 35% rebate? Well, that depends.
The Reduced 35% Pay With Points Rebate
As of June 1, most Business Platinum cardholders are now eligible for a 35% rebate, which, ultimately, means you’re redeeming points toward paid business or first-class flights on any airline, or economy flights on the one airline of your choice, for 1.54 cents apiece.
That’s considerably less than our 1.9-cent valuation of Membership Rewards points, and while you can easily get far more value from partner redemptions — such as short-haul flights booked with British Airways Avios or Singapore Suites booked with points transferred to KrisFlyer — you’re booking revenue flights through Amex Travel, which are not only eligible for mileage accrual but also aren’t limited by award availability, making them tremendously flexible.
Additionally, since you’re booking paid tickets, it’s important to factor in the miles you’ll earn for these redemptions. Major US airlines now award miles based on the cost of the ticket, so while you’ll earn less than before on many leisure fares, it’s easy to calculate your return.
Since I’ve selected United as my airline for the $200 Amex fee credit, if I’m booking economy travel using Pay With Points the flights need to be operated by UA. And, since I’m a Premier 1K elite member in the MileagePlus program, I earn 11 miles per dollar spent (excluding taxes and fees). I selected a few sample economy routes in order to calculate my return on United — again, tickets booked through Amex earn miles, while award redemptions through partners do not.
|Route||Base Fare||Total Cost||No Status (5x)||Silver (7x)||Gold (8x)||Platinum (9x)||1K (11x)||Value||Return (1K)|
So, based on the samples above and the fact that we value United miles at 1.5 cents apiece, I’ll earn up to a 14.2% return on purchased United tickets. That’s not even factoring in all the elite credits I’m earning, or the fact that I’m eligible for complimentary upgrades on domestic and regional flights and certificate upgrades on premium domestic routes (like Newark-Los Angeles) and long-haul international flights (booked in the “W” fare class or above).
Pairing a return of 14.2% (fairly standard for a domestic flight) with the Amex rebate of 35%, I’m effectively getting a total “rebate” of 49.2%. So, rather than the initial value I’m getting of 1.54 cents per point ($366 = 36,600 points – 12,810 points = 23,790 points after rebate), I’m actually getting 1.97 cents per point in value (23,790 points after rebate – 5,197 “points value” of miles = 18,593 points after rebate and miles). So, thanks to my top-tier United status, I’m actually coming out ahead compared to our 1.9-cent valuation of Amex points and our (conservative) 1.5-cent valuation of United miles. Of course I’ll earn a smaller return on international flights, since you don’t earn miles on taxes, but you get the idea.
But many cardholders may also have the Chase Sapphire Reserve, which lets you redeem for flights at 1.5 cents per point. Which option makes more sense here?
This is where our valuations really come in handy. While you can redeem Ultimate Rewards points for 1.5 cents each if you have the Sapphire Reserve card, we actually value these points at 2.2 cents each, thanks to Chase’s outstanding (and often instant) transfer partners, including United (with its great premium-cabin partner availability) and Hyatt (where it’s sometimes possible to get upwards of 3 cents per point in value from redemptions). So, while on the surface redeeming Chase points is almost as appealing, based on a 1.5-cent redemption rate, Ultimate Rewards points are ultimately more valuable than Membership Rewards.
The challenge with Amex’s Pay With Points program is that you’ll have to wait quite a while to get your rebate — while these had initially been processed in just a week or two, you’ll now have to wait a full 6-10 weeks for the rebate to appear. Additionally, rebates are limited to 500,000 bonus points per year, so this isn’t a great option for businesses hoping to wipe out substantial airfare costs.
Long story short, it comes down to your own situation — if you’re swimming in Amex points and don’t mind waiting the 6-10 weeks for your rebate to post, redeeming through Amex Travel likely makes more sense than using Chase Ultimate Rewards. However, if you have many more Chase points than Amex, or you’ve already reached Amex’s 500,000 bonus-point cap, Ultimate Rewards is likely the way to go.
Another option is the U.S. Bank Altitude Reserve card, which also lets you redeem points toward airfare at 1.5 cents apiece.
Although many Business Platinum cardholders were disappointed by Amex’s sudden move to devalue the Pay With Points rebate, in some cases it can still make sense to take advantage, even with the lower 35% return. While transferring to partners for business and first-class awards can yield a much higher value from your redemption, if you prefer to book economy flights or are working toward elite status, the Pay With Points program still offers a lot of appeal.
LIMITED TIME OFFER. Aside from the 100,000 points welcome bonus (available until 8/8/18), Amex recently made huge improvements to the Business Platinum Card, including the fact that you will now earn 50% more points on purchases of $5,000 or more, earn 5x on flights and eligible hotels at Amextravel.com and cardholders will receive a $200 airline fee credit each year.
- Limited Time Offer: Earn up to 100,000 Membership Rewards® Points.
- Earn 50,000 Membership Rewards® points after you spend $10,000 & an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership. Offer ends 8/8/18.†
- Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com.
- Get 50% more Membership Rewards® points. That's 1.5 points per dollar, on each eligible purchase of $5,000 or more. You can get up to 1 million additional points per year.
- 35% Airline Bonus: Use Membership Rewards® Pay with Points for all or part of a flight with your selected qualifying airline, and you can get 35% of the points back, up to 500,000 bonus points per calendar year.
- You can also receive 35% points back on all First and Business class flights, with all airlines available through American Express Travel.
- You can enjoy access to The American Express Global Lounge Collection℠ offering access to the most lounges across the globe, when compared with other U.S. credit card offerings. As of 11/2017
- Terms Apply
- See Rates & Fees