A regular 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.
Is this the right approach, or should you leave your points where they are for as long as you can?
(As Tesco and Avios are parting company on 18th January 2021, of course, this question will soon be academic. It remains relevant for holders of Amex Membership Rewards, Heathrow Rewards or HSBC points.)
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 or Virgin Points, even if you are 100% sure that is what you will spend them on.) Whilst I admit that Amex and Clubcard bonuses are rare, Heathrow Rewards and HSBC Premier HAVE been running them in recent years.
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.
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.
When that deal ended, we switched to Uber credit at 3 x face value. My choice was 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. Unfortunately the Uber deal has also ended now, leaving me looking for a new home for my Clubcard points.
Fast transfers are another reason to leave points where they are
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 Atlantic, Delta Air Lines 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, 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.
PS. If you are planning to cancel an Amex Platinum or Amex Gold card but don’t want to empty out your Membership Rewards account, there is a solution. Get the Amex Rewards Credit Card, which is FREE and allows you to keep your Membership Rewards account open. This article explains why the Amex Rewards Credit Card is an easy way to save your Membership Rewards points.