This article is another of the ‘how to’ pieces we have been running over August for the benefit of newer readers, although hopefully everyone will get some value from them.
A regular email question I receive from readers is about ‘convertible’ points. There is a psychological desire to move, say, your Tesco Clubcard points to Avios as soon as you receive them, perhaps because you like to see your Avios balance increasing.
This is not a logical approach. This is how I see it:
In general, you should value ‘convertible’ points more highly than a point which has no other use. It is therefore worth choosing ‘convertible’ points if given the choice, and you should keep your points unconverted for as long as possible.
There are a number of ‘convertible’ currencies you will come across.
This is the key point I want to make: if you have 1 American Express Membership Rewards point, it has more value than 1 Avios point even though the former converts into the latter.
There are various reasons for this:
An Amex point will hold its value better. If you transfer them to Avios and Avios devalues, you have lost out – you can’t convert them back. Keeping them as Amex points means that you have alternative options.
American Express or British Airways may decide to run a conversion bonus at some point for moving your points across to Avios. If this happened, 1 Amex point would be worth more than 1 Avios. (The possibility of a conversion bonus is why I NEVER recommend auto-converting Tesco points to Avios, even if you are 100% sure that is what you will spend them on.) Whilst I admit that Amex and Clubcard bonuses are thin on the ground, Heathrow Rewards and HSBC Premier HAVE been running them.
Amex may run a great promotion with another partner which allows you to get far more value from a point than you would get from 1 Avios.
Your personal priorities may change, and you may decide that you would prefer to redeem your Amex points for something else other than Avios. By not converting, you retain the flexibility. Within 12 months, for example, you will be able to redeem Virgin Flying Club miles for Air France and KLM flights which may make it more relevant for you.
I have written on HFP before that I do not convert my Tesco Clubcard points into Avios. For three years I used them for Safestore as we have some furniture with them and Safestore accepted Clubcard vouchers at 3 x face value. That deal has now ended but you can now redeem for Uber credit at 3 x face value. My choice is therefore to use 100 Clubcard points for either £3 of Uber credit or receive 240 Avios. If I took Avios I would be valuing them at 1.25p each – and I don’t.
There is another reason why keeping Amex and Tesco points in their ‘original’ form as long as possible makes sense. Both convert to Avios points within 24 hours of a transfer being initiated. If a reward seat opened up and I didn’t have enough Avios, I would be confident enough to assume that the seat would still be there tomorrow morning when I could have converted points across.
Some American Express transfers are INSTANT – Virgin, Delta and Emirates – as long as you have already linked your accounts. There is absolutely no reason whatsoever, except for a conversion bonus, why you should move points to those airlines before you need them.
Transfer timing is one reason why you may want to move across hotel points before you need them. The last time I moved some Starwood points to an airline (Lufthansa) it took 28 days! I was lucky that the redemption I wanted was still available. You shouldn’t rely on a hotel scheme moving your points across to British Airways in a hurry. If you will be totally reliant on a hotel transfer to make a redemption you have planned, you may want to move them in advance.
In general, however, if you want to maximise the value of your points then you want to maximise their flexibility. For ‘convertible’ currencies, this means keeping them in their original form as long as possible.
(Want to earn more Avios? Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)