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| Making the best use of points |
| by Brian Kelly |
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This week, we have a special edition of “Ask BK.” Larry M. has an impressive number of points that he’s accumulated, and he wrote in asking for advice about using points to book a cruise.
First off, Larry, I’d like to say I’m very impressed. It’s not often that I tell someone they have too many points! But frankly, that’s the situation you’re in.
He writes, “I was reading your newsletter today about how you can pay with points to book a cruise, however, I don’t understand fully how the point conversion works. I would like your help to understand the best card(s) to have to get the most points and conversion rate to book a cruise using points. My wife and I cruise Royal Caribbean or Celebrity Cruises exclusively and usually take 4-5 cruises a year from 7 days to 3 weeks.” Email has been edited for length and clarity.
Larry said that through his businesses, he has accumulated over 35 million points to date, with the bulk of those being on The Business Platinum Card® from American Express. He usually redeems around 1 to 1.5 million points for travel each year. He never pays for airfare, hotels, or breakfast or dinner in most hotels due to using his points and leveraging his loyalty programs.
He always pays out of pocket for cruises and would like to start accumulating points so he doesn’t have to pay for those either (over time).
Larry asked me to give an example of how many points it would take to pay for a $10,000 cruise with the Amex Business Platinum versus the Chase Sapphire Reserve® or another card that I recommend.
Trust me, I love American Express Membership Rewards points. However, you’ll get the best value for those points when using them for airfare — whether transferring to airline partners or through Pay with Points using your Amex Business Platinum card to get the 35% rebate on certain flights. You’re doing really well if your transactions on your credit card are for $5,000 or more; you’re earning 1.5 points per dollar and you’re getting around 1.65 cents per dollar when you redeem for travel, factoring in the rebate.
That said, Amex points are not great when redeeming for cruises. I went online to Amex Travel and tried to book a Cunard Line seven-night Italy and Adriatic cruise in July; the price was $6,337 or 905,306 points. This means you’re getting around 0.7 cents per point.
So, you have too many Amex points. You can use them for airfare, but it’s time to diversify. Now, regarding cruises: There are no good cruise credit cards, so forget that. What you really need is a solid cash-back charge card — ideally one with no preset spending limit or a large credit line (because you spend a lot). Many cards offer 2% back on all purchases without worrying about any bonus categories.
Let’s do the math on this — for every $1 million you spend, you’re going to get $20,000 in cash back. You can use that cash back to buy cruises, rental cars, you name it. In contrast, 1 million Amex points, when you redeem for a cruise, would be worth $7,000. So, you’d get nearly three times the value by spending on a 2% cash-back card.
I think it’s time to stop putting all the spending on the Amex and start earning cash back. The thing with cash back versus points is that you can invest the cash and it can grow over time. Your Amex points balance is not increasing in value over time. In fact, due to inflation on the prices of airline tickets (both in points and cash), you’re losing value. So use your stockpile of Amex points for flights and hotel points for hotels, and use your cash back for everything else.
Thanks for writing in!
British Airways status match offer
This week, British Airways launched a status match offer, so if you hold elite status on United Airlines or Delta Air Lines (or a few European programs), you can get Silver or Gold elite status for six months on British Airways. For example, my United Platinum status would give me British Airways Gold status, which grants me access to British Airways’ first-class lounges.
When flying domestically, it will also get me into American Airlines’ Admirals Clubs and Flagship Lounges. You read that right — by showing my BA Gold status card, I’ll get access. You can even use the Arrivals Lounge at London’s Heathrow International Airport (LHR), among other perks.
I decided to take them up on it. I am most looking forward to first-class lounge access and increased award availability. You see more details in our story and my Instagram reel.
Have a great weekend,
BK
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| Photo Credit: WYATT SMITH/THE POINTS GUY. |
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