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Thursday, July 14, 2016

American Express Membership Rewards Points can now be redeemed for any purchase

Thanks to Rewards Canada reader Brian K. who alerted us to this new feature from American Express! You can now redeem your Membership Rewards points for any purchase made with cards that earn the points. That's right, no longer are your limited to redeeming for travel purchases, converting to frequent flyer miles or guest points or merchandise.

They now call this the Use Points for Purchases program. Essentially this means all Membership Rewards points earning cards now have a cash back feature. Now you are probably wondering, what is the redemption rate? Is it the same as TripFlex? No it is not. As you can see the old 'TripFlex' redemption remains at 1,000 points for a $10 credit:

While the new feature to redeem points for any charge is at 1,000 points for a $7 credit:


So does this new redemption option offer good value? Not so much. As you can see it is 30% less than the Travel Redemption option. On most purchases this represents less than a 1% return which is low when you look a competing cash back cards like the mbna Rewards World Elite which offers a straight 2% cash back on all purchases.

What return does this actually represent?
American Express Gold Rewards Card
Gas, Grocery, Drug Store & Travel purchases: 1.4% (versus 2% for travel redemptions, 2%-5%+ when converting to frequent flyer/guest programs)
All other purchases: 0.7% (versus 1% for travel redemptions, 1%-2.5%+ when converting to frequent flyer/guest programs)

The Platinum Card from American Express
All purchases: 0.875% (versus 1.25% for travel redemptions, 1.25%-3.13%+ when converting to frequent flyer/guest programs)

American Express Business Gold Rewards Card
Select Merchant purchases: 1.4% (versus 2% for travel redemptions, 2%-5%+ when converting to frequent flyer/guest programs)
All other purchases: 0.7% (versus 1% for travel redemptions, 1%-2.5%+ when converting to frequent flyer/guest programs)

What's the verdict?
The redemption rate is OK if you have the Amex Gold Rewards Card and only make purchases at merchants that collect 2 Membership Rewards Points per dollar as your return is 1.4%. Not as high as many cash back cards out there but not bad either as many are at only 1%. When comparing Apples to Apples, RBC's Avion card which is a hybrid card like the Gold Rewards card offers a straight 1% return when redeeming for any purchase which puts it ahead since it covers all purchases at that rate not just bonus categories. I think Amex could have easily made it 1000 points for $10 to compete with the Avion card and somewhat compete with the higher end cash back cards via the Gold Rewards Card bonus categories but then again that would dilute Amex's SimplyCash portfolio and make those cards obsolete.

If you are only looking at redeeming points for non-travel purchases, ie any purchase made with a card I wouldn't recommend these cards nor the RBC Avion as we mentioned above there are cash back cards that give you a better return. However with that being said, those of you (including us here at Rewards Canada) who hold two or even three of the Amex cards listed above can consider this a welcome addition that just gives an extra redemption option that who knows, may be used in case of emergency. Maybe you are laid off from work or are injured where you can't work so your income isn't what your are used to and need to help pay off your purchases. Or you are one of those who has more points than they know what do with them so you are fine redeeming at these lower rates so at the very least you have more cash in your pocket. There will be people who use this option and there will be some who will not. In any case it is good to have.

What do you think of this new option of being to redeem Membership Rewards points for any purchase? Will you make use of it?



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