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Thursday, April 30, 2020

Financially stable? Now's the time to rack up some of the best travel rewards points & miles


Since the start of the pandemic a lot of discussion on Rewards Canada has centered around using your loyalty reward programs to help you financially - that is to use the points or miles for cash back or cash equivalents. But what if you are healthy financially and don't need to be shifting your loyalty program strategy and want to stick with travel rewards? Well there is no better time than now to build up your points and miles for future travel thanks to the Platinum Card from American Express double points promotion. On April 21 American Express revealed that Platinum Card cardmembers (existing and new) will receive double points on all purchases until July 20. They will also receive double the redemption value when using points for purchases although we're not concerning ourselves with the latter for this post.

On a normal day the Platinum Card will earn 3 points per dollar spend on dining (restaurants, fast food, coffee shops), 2 points per dollar on travel and 1 point on everything else. Now with this promotion those amounts are doubled so we see 6 points per dollar on dining, 4 points per dollar on travel and 2 points on everything else. We have confirmation from American Express that the double points is for ALL Platinum cardmembers which means if you don't have the card and get it now you'll be able to partake in the offer. This means all cardmembers can really work on building up their points balance for future travel and get amazing value from those purchases thanks to the strength and versatility of American Express' Membership Rewards program. The program has numerous travel rewards options from Fixed Points for Travel, Use Points for Travel Purchases and converting points to their frequent travel partners like Aeroplan, British Airways and more. Thanks to the promotion all these redemption option have doubled in value.

Let's take a look at all these options:

Fixed Points for Travel
The Fixed Points Travel Program is a take on traditional reward flights from frequent flyer programs. That is, you use a set amount of points to travel within, or to, certain regions without typically worrying about the price.

Booking flights using fixed points can come handy, especially during peak seasons when market fares are quite high. Amex’s Fixed Points Travel Program doesn’t limit specific airlines you need to book with. You can literally fly any airline, any time to any destination!

This provides a lot more flexibility than your traditional reward program, where typically the biggest complaint is a lack of flight availability!

Here are the points grids from Amex’s Fixed Point Travel Program for both economy and business class flights:



Recommending Reading: Redemption Stories: Saving $3,800 on last minute flights with the Platinum Card from American Express

Looking at the chart and the maximum redemption value of tickets you'll see that you can earn up to a 2 cents per point value when redeeming points via this method. And if you take into account the current Platinum offer of double points where you earn 2 to 6 points per dollar spent your effective rate of return for booking flights via the Fixed Points for Travel program can be as high as 12%! This matches the current rate for Using Points for Purchases option that is awarding $20 for every 1,000 point redeemed. Think about it you only need to spend $2,500 on dining to get a popular route short haul flight. You can't do that with any other program right now and remember you don't need to redeem by July 20 - simply put all your spending on the Platinum Card until and then use the points when you wish - they never expire as long as you have an active Membership Rewards card (Hint you can get yourself the Gold Rewards Card in the future if you don't wish to keep the Platinum Card down the road) Another hint - if you are about maximizing value you'll want your base fare from the the ticket to push as close to the Maximum Fare listed in the chart or even go past as you can then redeem 1,000 points for every $10 over and above (including taxes and fees) or just pay cash for that difference.

Use Points for Purchases (Travel)
The travel option of  Use Points for Purchases is great for those looking for the utmost flexibility in using points for travel. You get to book the flights that are best for you, from the carrier you want, right from the airline’s website, a travel agent or any online travel portal. It even covers non-air travel, such as car rentals.

Book your hotel via the hotel's website, a cruise via a travel agent or even an all-inclusive vacation, and you can redeem your Membership Rewards points for it all.  All you have to do is charge the travel to your Platinum Card and when the charge shows up, redeem your points against it at a rate of 1,000 points for a $10 statement credit. This means if you are redeeming points earned during this double points promotion you are getting a 2% to 6% return. Here's the kicker and also a plan from one of our readers: Book future travel by early July so that you can take advantage of the other half of this promotion - the double redemption value. That means you can get a $20 statement credit for 1,000 points and pushes you to a  4 to 12% return on your spending.  Here is what Gary A. asked and may be planning:
Question about the 50K bonus points. Will they post to the account as soon as the $3K spend threshold is met, or will it wait until the 3 month mark is achieved? As of today April 24, we would be looking at 3 months (minus 4 days) before July 20. So if it posts after the three months I could never take advantage of the double redemption bonus.

For this to make sense for me, that 50K bonus points would need to get into the account BEFORE the 3 month mark. In my case, I have two big airline tickets for May 2021 flights that I would buy. If those cost me $7K and I was able to make that purchase say mid-June (fingers crossed they would be available for purchase by that point), the points for that purchase would be 4 pts / dollar (28k points) plus the 50K points, totaling 78000 pts which I redeem at 1000pt = $20 and I'd get $1560 off that purchase. With an additional $200 as travel credit, that's $1760 off the purchase for a $700 investment (annual fee). Net: $1060 in my pocket... Am I missing something or is that ridiculously good return?
Gary's numbers look right to me and hopefully it may help you get the wheels turning for your future travel plans.

The great thing with Membership Rewards is that you can continue to fund your trip with points even after it's over as American Express allows you to redeem for a charge up to 12 months after it gets posted to your account.

Frequent Travel Partners
Now on to another fun part! The section where you can really get some outsized value for earning double Membership Rewards points until late July. Membership Rewards points earned with the Platinum Card from American Express can be converted to six airline and two hotel programs. Those programs and their conversion ratios are:
  • Air Canada Aeroplan 1:1
  • British Airways Executive Club 1:1
  • Alitalia MilleMiglia 1:0.75
  • Cathay Pacific Asia Miles 1:0.75
  • Delta SkyMiles 1:0.75
  • Etihad Guest 1:0.75
  • Hilton Honors 1:1
  • Marriott Bonvoy 1:1.2
The bold emphasis is mine as those are the three best programs to convert to and what I provide more detail on.

Air Canada Aeroplan
You can convert the Membership Rewards points earned with the Platinum Card directly to Air Canada Aeroplan on a 1 to 1 basis and the conversion is typically instant although Amex states it can take up to 30 minutes. This is key to being one of the best conversion options of all for Canadians since you don't have to convert speculatively - you hold onto your points in Membership Rewards and while you are searching for and about to book an Aeroplan award flight you can convert the points at that time.

And the value for converting to Aeroplan can be huge. Firstly, as you are earning 2 to 6 points per dollar spent until July 20 you are effectively earning 2 to 6 Aeroplan Miles per dollar. This cannot be matched by any card in our market right now. We value Aeroplan Miles at 1.2 cents at the absolute minimum, which means your return on spending would run in the 2.4 to 7.2% range but I stress that is an absolute minimum. With Aeroplan you can easily push that return much higher, well into 2 to 3 cents per points for economy and well above 6 cents per points for business class and first class redemptions. In fact in some past random searches we have found business class award flights giving a value of 7.75 cents per mile. Take 6 points per dollar earned on the Platinum Card for dining, convert to Aeroplan at 1:1 for 6 miles per dollar and then a value of 7.75 cents per mile and you have a 46.5% return on that spending!! Yes I do make lots of typos in my posts but this one is not a typo - you can potentially get a 46.5% return on your dining spend! There is even the possibility to get even more than that if you find a higher value flight. I am just shy of 20 years of running Rewards Canada and never have I seen a potential return that high, in fact nothing ever has even come close to that!

Here is the 7.75 cents example we found last year:
How about doing a one-way in business class between Toronto and San Francisco - and there's a bonus - it is on Boeing 787-9 with lie flat seats:



This round trip flight is 25,000 miles + $123.69 in taxes and fees. To buy the flight outright with Air Canada would cost $2063.60. The savings is $1939.91 or 7.75 cents per mile. Link to original post

British Airways Executive Club
Outside of the world of frequent flyers and miles/points enthusiasts British Airways Executive Club (BAEC) is a relative unknown for many Canadians. Like Aeroplan, Membership Rewards points covert 1:1 to Avios, which is the currency of British Airways Executive Club so you are earning 2 to 6 Avios per dollar spent.  It can take up to 5 days for points to convert from Amex to BAEC. The beauty of BAEC is that you have the entire oneworld Alliance to use the Avios with. oneworld includes British Airways of course, Aer Lingus, Iberia, American Airlines, Alaska Airlines, Cathay Pacific and a whole slew of other airlines. Being a frequent flyer there again is the ability to pull some outsized value when you redeem for business class or first class flights but it also provides some really good economy class options. For example, outside of North America flights that fall into their Zone 1 category of 1-650 miles in distance only require 4,000 Avios on British Airways, Aer Lingus, Iberia & Vueling or 6,000 Avios on partner airlines! Putting that into terms of the double points earned for dining on the Platinum Card and you can have an award flight for $667 in spending. Again unmatched in terms of how little spend you need to actually get a flight. And the icing on the cake is that American Express does offer occasional bonuses for transferring to British Airways that can push the value even higher. That being said I am going to predict we won't see the transfer bonus this year because of the double points promotion. Here


Recommended Reading on using Avios:
- Utilizing British Airways' Executive Club for flights in North America

- How you can easily get a free flight between Toronto and Dublin, Ireland (pre taxes/fees) or 4 flights for $240+fees


Marriott Bonvoy
The last of the best three programs to convert to is Marriott Bonvoy and it has a redemption ratio of 5 Membership Rewards points to 6 Marriott Bonvoy points. That means with the current double points promotion you are earning the equivalent of 2.4 to 7.2 Marriott Bonvoy points per dollar spent. At the bottom end we value Marriott Bonvoy points a 1 cent apiece. So at the very minimum you'd be getting a 2.4 to 7.2% return but again Marriott is the type of program that you can get some big value from. In the past we have found redemption options almost as high as 5% (4.89 to be exact) so returns of around 11.7% to 35% and that's just basing it on one example. There are possibilities to pull more value out of the program especially when you consider that Marriott Bonvoy will give you one night free when you redeem for 5 consecutive nights (you only end up paying points for 4 nights). 

Other Frequent Travel Partners
It can even be advantageous to convert to some of the other airline programs despite the transfer ratio not being as good as the three above. Cathay Pacific, Delta and Etihad Airways all have sweet spots where taking that lower transfer rate may make sense to redeem for flights. For example you may be building a big trip to multiple continents and you maybe you need Aeroplan to get to Africa but then can utilize Etihad to fly from Africa to Asia and so on! There are just so many possibilities with American Express' Membership Rewards!

As you can see the key right now is to have the card and put every little bit of spending on it and worry about redemption later. If you aren't looking at maximizing the double redemption option of 1,000 points for $20 you can literally sit on the points for when you need them.  If you don't have the card I would apply for it sooner than later so you can maximize the amount of days you can spend on it. Remember that the Platinum Card currently offers 50,000 welcome points when you spend $3,000 on the card in the first three months of having it and another 10,000 points when you hold the card for 6 months. Remember as well that the card does have a $699 annual fee but you get an annual $200 travel credit and tons of benefits on top of that. Witt the current double points (and double redemption option) the card is the most valuable card in Canada right now even with the $699 annual fee. It is hands down the best card to have or get right now!

In fact here are Rewards Canada all our spending outside of groceries and food delivery services (which go on our Cobalt cards) are now going on the Platinum Card from American Express.

Learn more about and apply for the Platinum Card here.

Below is the most current offer for the card. It may not reflect the discussion above.

 



This post was not sponsored by American Express. All opinions are that of the author.

American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information click the Apply now link. Conditions apply

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