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Will Amex devalue Membership Rewards?

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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.)

Comments (113)

  • Mike says:

    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.

  • Alex says:

    Not very convincing, Rob…

  • BJ says:

    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.

    • BJ says:

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

  • Peter K says:

    I converted all my MR last night as it turns out. I decided personally it wasn’t worth the risk holding on to them. Others, including Rob, might feel differently. However I don’t, for example, have the option to convert out to a $ Amex card which some do. We reach make an assessment and do what we feel is best.

    • Alex W says:

      No guarantee the $ card wouldn’t get decimated as well.

    • Rob says:

      We do know, for a fact, that Avios changing are coming though …

      • Michael says:

        Will we get notice of the change? I wasn’t collecting avios in great numbers the last time there was a devaluation.

      • marcw says:

        You have been saying this for at least 18 months now…. not very convincing though.

        • Alex W says:

          It’s inevitable. I’m going to maintain enough Avios to use a 241 and no excess.

        • Rob says:

          It was approved at the April 2018 BA board meeting apparently. Whether it will still happen, whether the IT changes are beyond them etc etc is a different question.

        • BJ says:

          That sort of suggests dynamic pricing.

    • Graham Walsh says:

      I did too as I need to them for a 241 redemption as we decided last night. Why oh why does it take up to 3 working days to transfer? I can transfer a load of real money around the world instantly in todays world. Guess it’s easy to blame someone “IT Systems” unless they are doing manual fraud checks in the background.

  • Alan says:

    Of course, the counterpoint to Rob’s argument is that by keeping your MR points you now have 2 potential devaluations (one in the value of MR and one in the value of the target scheme) if you have a home that you particularly want them to go to – many readers simply don’t generate enough points to spread themselves across different schemes so will target one of them.

    • Alan says:

      Although as long as they give fair warning as they did in Oz and protect value of existing MR balance then less to worry about.

  • Ken says:

    A devaluation risks pissing off a lot of their best and most profitable customers (which is presumably why they doubled Oz platinum balances.

    Limiting churning and referrals doesn’t.

    • BillyBass says:

      So? You really think Amex is bothered by its small personal customer base? This is business. Despite what some H4Pers think Amex customers aren’t any more special than HSBC et el customers.

  • Mr Entitled says:

    Moved my final slew of MR points (inflated by some quick referrals sensing what was coming post the welcome bonus changes) and closed my final Amex card this morning.

    The only constant is change and Amex have made a number of significant changes recently. I’m out.

  • marcw says:

    I guess an increase in card membership fees is due.

    • Alex says:

      An increase in fees would be, in my opinion “welcomed” – Provided the perks are adjusted to match! I would happily pay £550 for my plat if airline credit, Uber credit etc was added like in the US. Or as someone mentioned on another article, they have spend related bonuses – Spend £15K in the card year and get 10K points for example(like gold card) but make it tiers so high spend gains you more and more… Just my opinion anyway

      • marcw says:

        I suspect Platinum will increase to 550 GBP…. adjusting not to the US market, but to European market. I know you lot like to compare to the US, but so far the UK has been an outlier compared to the European market. The recent changes demonstrates that now Amex UK is adjusting to Amex EU…….

        • Alex says:

          The German plat card is cheaper and offers 200 euro travel credit. So other EU countries have these benefits so comparison to the US or EU really has no difference as all countries are completely different.

      • Russ says:

        Not sure on the Platinum card. Everyone’s circumstances are different and for us we’re not got much use for Priority Pass, the insurance, we use taxis or hotel limos so don’t need car hire. What would make my ears perk up is more hotel transfer partners such as Hyatt and Shangri La, points transfer bonus’s and earning 2 points on travel like on gold – on rose gold metal….

    • BillyBass says:

      I agree. Price will increase in line with the continent. But there won’t be any new perks. Which I’m sure the same old H4Pers will spin as being brilliant.

    • Anna says:

      I would consider an increase a kick in the teeth after the reduction in sign up and referral bonuses. Unless they have some VERY good perks lined up, lined GUARANTEED lounge access, available to book in advance, free (PP is pretty useless to me at the moment).