Probably the worst possible way of redeeming any sort of travel loyalty points, whether it be airline miles, hotel points or credit cards points, is for ‘real stuff’.
The ‘person who redeemed their Lufthansa miles for a toaster’ is short-hand in the loyalty industry for describing someone who makes sub-optimal use of their points. The only reason that Lufthansa has made a massive business out of their Worldshop operation (they even post me a big glossy catalogue each year) is that the hard 3-year expiry date on their miles creates a continual stream of panic redemptions.
It’s not that the loyalty schemes are trying to rip you off. It is simply that ‘stuff’:
is heavy and difficult to ship
has costs associated with returns and repairs and
is not bought in big enough quantities by the programmes to get serious discounts
American Express has decided to bite the bullet. It is dropping all Membership Rewards redemptions for physical goods on 31st May.
There is no dedicated page explaining this on the website but the banner below is showing at the bottom, in rotation with other banners, when you log in at membershiprewards.co.uk:
How bad are Membership Rewards redemptions for goods?
Let’s look at a typical redemption.
The Kenwood De’Longhi Nespresso Coffee Machine pictured below costs 59,340 Membership Rewards points:
The RRP for this product is £280. This means that it is ALREADY poor value for points, since you are only getting 0.47p per Membership Rewards point.
However, scoot over to Amazon (click here) and the same coffee machine is just £247:
This means that you’re only getting 0.41p per Membership Rewards point.
And here’s the big contradiction ….
You can redeem your Membership Rewards points for Amazon gift cards at the rate of 0.5p per point!
So, if you really really really wanted to use your points for this particular Nespresso machine, it makes more sense to redeem 49,400 Membership Rewards points for £247 of Amazon gift cards, rather than use 59,340 points to buy it direct from American Express.
(Of course, it makes FAR more sense to redeem your Membership Rewards points for a travel reward. This HFP article looks at the most valuable Membership Rewards redemptions.)
Everyone wins from this American Express change (for once!). Amex has an easier life because it no longer has to deal with the administration of physical product redemptions, it can streamline the Membership Rewards website and there is no risk of any cardholder making a redemption of very dubious value ….
PS. If you missed it, take a look at our recent article on the top 10 reasons why you should get the ‘free for life’ American Express Rewards Credit Card.