Will Amex devalue Membership Rewards – and should you convert Amex, Clubcard, Heathrow or HSBC points to Avios on receipt?

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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.

Should you convert Membership Rewards points to Avios?

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 miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

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Comments

  1. Roberto says:

    Did the recent devaluation in Australia come with any notice period or as a surprise to those holding MR?

    • SydneySwan says:

      We received about 4 months notice. However I suspect that many Amex holders in Australia are still unaware of the changes so a surprise is in store for them..

    • 4 months notice.

    • Yes, a few months notice was given.
      The scale of the devaluation also varied between cards as different Amex cards used different MR “currencies”, some devalued from 1:1 to 2:1 while others devalued from 3:2 to 2:1.

      So far, the sign-up bonuses haven’t reduced yet (though the frequency of inflated/extra sign-up bonuses has decreased), so hopefully the MR devaluation was instead of a sign-up bonus devaluation…

      Incidentally, Australian Platinum cardholders who held the card prior to the devaluation announcement were protected from the devaluation on historic MR balances as Amex doubled their points balance on Devaluation Day. Any future earns are still at the reduced rate value though. (other cardholders had to convert before the deadline or take the full hit on their balance).

    • The Original Nick says:

      Read the article

  2. The Streets says:

    I’ve lost all trust with any “great promotion” that AMEX will allow with another partner. Four months on and despite repeated calls to Amex (including the Brighton branch) my 3:1 Hilton Honors promotional ratio has still not been honoured with Amex saying it’s Hilton’s fault not theirs

    • Mr Entitled says:

      I had the same issue. After repeated attenpts to resolve I lost patience and launched an official compliant. This finally got me to a person with the ability to authorise new MR points which were then transferred across. I ended up with £40 compensation but a distinctly sour experience of their famed customer service.

  3. Slightly OT. I called Amex on the weekend to cancel my BAPP card. The lady on the phone (who was from the Philippines call centre) asked me if I’d used my voucher. I said I had. She said if I cancelled my card I’d forfeit my voucher and she told me to downgrade to the free card. Is what she said true? I wanted to cancel to start the two year wait to reapply for a sign up bonus.

    • I think that is the policy, but certainly mine didn’t go anywhere when I cancelled & I’ve never seen anyone else report that it did. You will need to pay with an Amex, but this could belong to someone else

    • If you used a voucher already, surely you would have your ticket issued…

    • They all say this and to date we have just ignored it. However, with the recent changes some fear they may start enforcing payment with BAPP when using voucher. Personally, I’m still comfortable downgrading to blue once so trigger my next voucher.

      • +1, especially as it’s now going to be so difficult to churn for a sign up bonus on BA cards. However, I prefer to pay for the fees/taxes/gouging on BAPP for the 3 x avios – there are usually three of us travelling so this years “fees” are going to be in the region of £2k!

  4. It’s also worth noting that earning rates, especially on the Platinum Card when the devaluation happened so it wasn’t as big a kick in the face as it might have first seemed. The main issue was that, as Rob says, it basically forces your hand on a transfer before starting again from zero under the new rules.

  5. Are the airline transfer rates solely at the discretion of amex or are they likely to have been the subject of agreements with the airlines that would need to be unpicked?

  6. KBuffett says:

    We should all have a long hard think about why Rob has written this article.

    If he does know anything, there will likely be an embargo on the information.

    • Rooster says:

      Hardly, whether this article was written or not doesn’t change the fact if something is on the way or not.

    • If so, would he not then more likely avoid writing articles with the potential to compromise an inside track with amex? From Rob’s previous comments, e.g. in relation to Tesco, the relationship between blogs (and the wider media) and industry is complex and does not always fit hand in glove in the way we might first reasonably expect.

      The question as to holding/devaluation is essentially a very simple one…the best strategy is always earn and burn. Except in the real world some of us play the game successfully enough to do this with a cushion/balance ranging from months to years while others struggle to realise their goals. In such circunstances the convertible currencies are inherently more valuable. The risks are not fundamentally much reduced by transferring out to other schemes, e.g. how many times has Marriott changed hotel categories in the past 12 months? I currently have BA, VS, LH, AF, Hilton, IHG, Bonvoy, Nectar and Clubcard in my portfolio consequently I feel the value of maintaining MR as a convertible currency outweighs the risks of devaluation. Besides at the end of the day I prefer to be an optimist and believe that alongside these negative changes amex has something good in store for those who stick with them. Even if this proves not to be the case, amex will remain the best game in town so we will just have to grin and bear it.

    • Yorkieflyer says:

      Yes but you are assuming that Rob would deliberately mislead his readership. I find this unlikely.

      • I always got the impression Rob seeks to inform readers by exploring issues so that they can reach their own decisions. I’ve never felt he pushes particular decisions or behaviour, and certainly have never believed he misleads HFP readers.

    • Surely, if Rob knew anything was about to happen he wouldn’t have written any article? He is, with this article, discouraging people from converting their MR. If AMEX now announce a devaluation then his credibility and that of his blog are torn to shreds – why would anyone believe anything he says in the future?

      Of course, if AMEX do now announce a devaluation Rob could claim that he knew nothing about it but his reputation would still be very badly damaged as many on here would simply not believe him.

      • Correct. I know what is coming next and it isn’t an MR cut.

        The only caveat is that MR is probably outside the scope of credit licensing so you could argue Amex is not obliged to tell it’s partners.

        • Pro rata refunds? I know you have said in the past that is a global policy but I’m not sure it applies to the €/$ cards? And, it would fit with current efforts to reduce churning.

        • Thomas Howard says:

          You’ve also written an article that suggests leaving Amex completely for 24 months is a “pretty attractive” option so you could infer that what’s coming up next isn’t great.

          • It’s attractive because – unless you are spending £10,000 per year on a Gold card – you’ll earn more points by signing up every 2 years then you would by holding the card and putting your spending on it. Simple maths.

        • Oh joy! More bad news on the (rapidly approaching) horizon.

      • Very dramatic…I think most readers will still remember IB90k long after they have forgotten any miscalled MR devaluation 🙂

    • I wrote it ‘cos it came up yesterday in the comments!

  7. Mr Entitled says:

    The 2% Amex article threshold is taking a bit of a beating recently.

  8. > An Amex point will hold its value better

    This claim might be true … but only to the moment Amex do a big devaluation, such as the example given in Oz.

    If the same beancounters who appear to run BAEC are getting the upper hand at Amex (see recent examples of benefit cuts and devals) then I’d be fairly uncomfortable sitting on a big stash of MRs.

    “Bank of Amex” isn’t really a safer place to store points than any other loyalty scheme.

    • guesswho2000 says:

      True, but we got plenty of notice, and I suspect everyone transferred out by the deadline, I know I did, so we didn’t lose out.

      Most (all?) Platinum/Centurion cardholders got their points doubled to retain the value of those earned to date too, though other cardholders didn’t get this special treatment.

  9. I have rather lost “faith” in Amex. Two huge cuts “churning increased to 24 month interval” and “reduced sign up bonuses and referral earning rates” in a short space of time. Both of which have significantly reduced (almost totally) my ability to earn significant amounts of MR and thus AVOIS and travel BA first class once a year on my holidays (with BA 241). I can’t help feeling the next step is reducing the value of a MR or limiting the usage of BA241 in the same way Virgin has. It might seem the Amex future is gloomy – but the past was bright circa with lots of CW and First courtesy of Amex. Also I am firm believer than when one door closes (billhop, 3 V, printer carts, iberia 90K, Tesco Life Insurance/Pet Insurance etc etc) another one is found to be ajar. And I believe the best place to find the ajar door id HFP…….thanks Rob

    • Brighton Belle says:

      I don’t see any method now to accumulate enough avios, MR points or whatever to redeem on a flight. I simply won’t live long enough in a 2 year earn and burn cycle to collect enough points for 2 of us. I don’t have the income to push £50k through cards and I don’t need to buy that amount of stuff these days. Amex has lost me. Cash tixs from now on in row 55.

  10. Not very convincing, Rob…

  11. Slightly OT: are amex self-referrals still working ok in recent days?

    • Howard says:

      I tried a self referral and it failed. Was December 2018.

      First time I ever tried it.

      Thanks for the article Rob.

      Sitting on 280,000 Amex Reward points.

      Have AUH to LHR in Etihad in May First Class in
      the 380. Hope it won’t be our last.

    • Mr Entitled says:

      Worked for me about 2 or 3 weeks ago.

    • Thanks all for the responses, I’ll risk another.

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