American Express' (NYSE:AXP) credit card points program, Membership Rewards, is considered by many to be the best rewards program available.
In this post we'll take a deep dive into the AMEX points program to understand what makes it great and where it comes up short.
How to get AMEX points
American Express currently offers a diverse offering of personal and business credit cards that accumulate Membership Rewards points when you spend with your AMEX card. Each card is slightly different and optimized for various spending habits, but generally speaking you should expect to accumulate one point per dollar spent with your card.
For new American Express customers, the company typically offers sign-up bonuses for their various cards, sometimes up to 50,000 AMEX points per card. To claim these bonus points, you have to spend a certain minimum amount with your card in the first few months you have it. The spending requirement and time limit will vary, but generally are between $1,000 and $3,000 in the first one to three months.
Most AMEX cards come with an annual fee. That fee will range from just a few dollars to several hundred depending on the specific card. Most times American Express will waive the first year annual fee when you apply for your new card; however, these fees are still worth taking into consideration when you choose your card because it's pretty unlikely that future fees will be waived.
These bonuses can be an incredible way to boost your point balance quickly, as long as you use your new card responsibly and pay off the balance every month.
For example, the American Express Premier Rewards Gold card offers a 50,000 AMEX point sign up bonus if you spend $1,000 on purchases with your card in the first three months you have the card. You'll also earn three points per dollar spent on flights, two points per dollar at U.S. gas stations, supermarkets, and restaurants, and one point per dollar on everything else.
These offers vary over time and with the various American Express card offerings. It's worth spending some time investigating which cards are presently offering the best deals if want to maximize your AMEX points.
The best ways to spend your AMEX points
Once you've built a healthy balance of AMEX points, it's time to put them to use. American Express offers a plethora of options to spend your points, some of which offer much better bang for your buck than others.
In most cases, the best deals are travel related. AMEX points can transfer to many hotel rewards, airline frequent flier programs, and others. For most, the frequent flier points offer the biggest appeal.
Depending on the airline, AMEX points can sometimes net you free flights all over the country or the world for pennies on the dollar. Note that your mileage will vary depending on the always-changing value of the frequent flier points for each airline. At the time of this writing, transferring points to Delta's frequent flyer program gives the lowest return, while transfers to British Airways maximizes your AMEX points' value.
AMEX points can also sometimes be used very effectively to purchase gift cards for variety of different stores and restaurants. These gift card deals change often though, so make sure you shop around every so often if you choose to pursue this option. If the value of the gift card you're buying works out to $1.25 per point or better, then you're getting a pretty good deal.
The worst ways to spend your AMEX points
Other options to use your AMEX points present much less value. Generally speaking, using your points to shop on American Express' Membership Rewards website is a bad value, typically offering you just $0.5 per point in value.
Likewise, using your points to pay for charges on your account only gives $0.6 per point in value. While marginally better than shopping with your points through the Membership Rewards store, this is still a bad deal.
You can shop with your points on Amazon.com, but the value per point is still a low $0.7.
The final verdict
The American Express Membership Rewards program remains an attractive points program today, so long as card members use their points wisely to maximize their value. Generally speaking, using your AMEX points for travel is the best way to do that.
However, if you have a specific benefit you desire, like cash back or shopping benefits, it pays to spend a few minutes on the company's website to explore the many different card options. Each card is slightly different and may not conform to the more general discussion here.
And for those of you looking for a generous way to use your extra AMEX points, consider donating them to a charity of your choice through the Membership Rewards website. There are a variety of options, and you can help make the world a better place and still get 1 cent per point of value.