[Australia – Opinion] Should I Use My AMEX Points on Gift Cards? No.
The concepts in this post are not limited to pre-devalutaion AMEX Rewards. The concepts can very much still be applied beyond April 15, 2019, so don’t feel the need to stop reading if you’re reading this beyond this date.
Second opinion piece on the AMEX changes in quick succession. I’m writing this because several people have been asking me if they should use their AMEX points on Gift Cards.
No you should not. Not because “using it on Gift Cards and blenders and TVs sucks”, even though there’s a small element of truth to that.
The main reason I say no is because it actually costs you less points to redeem your points on selected transactions/charges on your Credit Card. However, you’ll firstly need to verify whether this option is actually available to you.
At present, Gift Cards typically cost you 6750 for a $50 Gift Card, and the rate doesn’t go down as you select a higher denomination of the gift card. That means, you’ll typically require 67500 points for a $500 Gift Card, which is exactly 10x the rate required for the $50 Gift Card.
Using “Select + Pay with Points”, there are selected transactions that cost you 1000 points for a $8.05 credit. Using the same scale, a $100 credit would cost you 12422 points compared to requiring 13500 for a $100 Gift Card.
Go to the Membership Rewards section your AMEX Account, and view the “More Ways” tab, and select “Select + Pay with Points”. There is also the option of “Points for Credit”, but the redemption rate for this is inferior to that of Gift Cards (equivalent of $100 for 14500 points).
After selecting that, you should see a list of your transactions, with the ones eligible for the promotional 1000 pts to offset $8.05 appearing at the top. It looks roughly like this.
Haven’t made any transactions recently? Sorry, you probably don’t have this option available to you then.
The other advantage of this over Gift Cards is you only require 1000 points to redeem this, whereas the smallest demoniation of a Gift Card available is $50, which requires 6750 points.
Second Option: Using it on AMEX Travel
AMEX Travel is AMEX’s own dedicated travel portal. Through their portal, you can book flights, hotels, hire cars, or experiences.
Through the portal, you can use your points at a rate of 1pt = $0.01, or $100 for 10000 points.
There are certainly limitations, the most obvious one being that you have to book via their own Travel Portal.
I’ve personally used their portal to book flights and hotels.
The things to be aware of are…
- I have never seen a budget carrier appear on an AMEX Travel search result – think Jetstar, AirAsia, Scoot, Tiger.
- This makes a big difference to the perceived value of your points on airfares. If you’re the type to be happy to fly budget, you would effectively be paying a significant premium to use your points and fly a premium airline. I say this with the (reasonable) assumption that budget is always cheaper than premium.
- If the route you’re flying is only served by premium airlines, this option is more likely to be reasonable.
- The airfares are usually either about the same or higher. I have seen the odd occasion where the flights were cheaper compared to where I could find elsewhere, but this is very much the exception rather than the norm.
- This is very important, because if it ends up being more expensive than getting cash out of your points and booking your flight separately, you shouldn’t use your points on flights.
- You can earn Frequent Flyer points and status credits as normal
- The flight can be booked for someone else. It doesn’t have to be in your name
- You must pay with your own AMEX card (and there’s no surcharge. lol – would be funny if there was)
- I tend to find hotels on AMEX Travel too expensive relative to other platforms (Agoda, Hotels.com, Hotelscombined)
- Again, as above with flights, you need to do your own comparison to determine whether it is worth doing or not. In my experience, the “premium” with booking via AMEX Travel is likely to make this option even less attractive than the flights option.
- If you’re after hotel loyalty points/perks, you may not get them through bookings made via AMEX Travel
I can’t comment on using AMEX Travel for hiring cars or experiences because I’ve never tried, but I would imagine the concept is much the same.
In summary, this is what I would do if I was thinking of using points on flights:
- Find the cheapest price possible for the flight that I want via Kayak/Skyscanner/Google Flights/Momondo (let’s pretend this is $100)
- Find the cheapest price possible for the closest flight to the one I want AMEX Travel (let’s pretend this is $120)
- I’m paying 12000 points for my flight via AMEX Travel. The 12000 points could have alternatively helped me to offset $96.60 worth of charges using the 15% promotion above. However, the cheapest price I was actually able to find the flight for was $100. The real comparison you’re making here is $96.60 vs $100. In this case, it is “worth” paying the $20 premium for your flight on AMEX Travel, because this amount of points would have otherwise bought you $96.60 of credit.
Note that the example above does not factor in the fact you would have earned some points on paying on your Credit Card separately, and as to whether that closes the $3.40 gap in price, you’ll have to do your own calculations on that (because it depends on how many points you’d earn and this varies by card).
Should you just cash out for Gift Cards? Most likely not. Because you should be able to get cash for a superior rate.
If you can’t (based on my tips above), and you have absolutely no intention to put the points into a Frequent Flyer Program, then sure, get Gift Cards then.