Will Amex devalue Membership Rewards?

In the comments to our article yesterday on the changes to certain American Express card sign-up and referral bonuses, a couple of readers questioned the merit of leaving their Membership Rewards points sitting with American Express, rather than moving them.

The logic, according to these people, is that American Express has shown that it is happy to make changes to its products with zero notice.  Could there be a wholesale devaluation of Membership Rewards points overnight?

There are two reasons why we should NOT dismiss this idea out of hand:

Frequent flyer mile redemptions are substantially more expensive for American Express than redeeming for gift cards or statement credit

American Express recently devalued Membership Rewards points in Australia, cutting the airline transfer rate from 1:1 to 2:1 whilst leaving other rewards intact

However, set against this are three other facts:

Changing Membership Rewards is messy, because there are over 10 different cards – plus cards no longer available to new cardholders – which offer it.  This is a mix of personal, small business and corporate cards.  It would be far easier to change the earning rate of Membership Rewards points on individual cards.

As far as I know, none of the personal UK cards earning Membership Rewards points are impacted by the caps on interchange fees, and the corporate and small business cards certainly are not.

Even when a change was made to the Australian scheme, American Express gave four months notice.  Nothing happened overnight.

There is nothing here which causes me substantial concern, to be honest.

Why ‘convertible’ points are more valuable than all other points

Let’s recap why you should value ‘convertible’ points more highly than other points, and why you definitely should not rush to convert them.

In general, you should value ‘convertible’ points more highly than a point which has no other use.  It is therefore worth choosing ‘convertible’ points when 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.  The main one is American Express Membership Rewards points, but Tesco Clubcard points, Heathrow Rewards points, HSBC Premier Mastercard points and most hotel scheme points are also, to a lesser or greater extent, convertible.

There is one thing you need to remember

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.  Later this year for example, you should be able to redeem Virgin Flying Club miles for Air France and KLM flights which may make it more relevant for you.  On the other hand, the recent spike in surcharges on Upper Class Virgin Atlantic flights to the US means you may be less keen on that scheme.

I have written on HfP before that I do not convert my Tesco Clubcard points into Avios.  For 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 ended but I now redeem for Uber credit at 3 x face value.  My choice is to use 100 Clubcard points for either £3 off my Uber bills 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 Membership Rewards 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.

Some transfers, admittedly, are not instant.  Slow transfers are one reason why you may want to move across hotel points before you need them.  The last time I moved some Starwood (now Marriott Bonvoy) points to 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 points from credit cards? – April 2024 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.