A couple of weeks ago my best frenemy, The Devil’s Advocate, tried to piss on my Lufthansa parade.
Wahhhh, who wants to take a bath in an amazing jacuzzi tub (which has seen more rears than an American MD-80 seat). Wahhh, who needs rubber ducks (when you can buy them for 10 cents online). Wahhh, who needs a seat and a bed when you can just have an angled flat seat (okay, maybe he didn’t specifically say that, but he does fly his girlfriend in angled flat business class, so we can only assume). 😉
This week he’s back with an equally nonsensical piece, entitled “AmEx Membership Rewards Points Are Totally Worthless.” When I first saw the title I had to double check to make sure that Christopher Elliott didn’t start writing for Hack My Trip.
His argument basically boils down to Membership Rewards points being worthless because:
- They have a lot of the same transfer partners as the other major transferable points currencies
- They have a lot of less-than-ideal transfer partners
- The hotel transfer partners are “useless” because of the bad transfer ratios
Julian seems to be a bit confused about the main benefit of transferable points currencies. They’re not valuable because they’ll get you a cheap ride on a triple deck whisper jet to outer space. They’re valuable because of how practical they are, and a large part of that practicality comes from the fact that several of the points currencies have redundant transfer partners.
Here are what I consider to be a few of the biggest selling points of the major transferable points currencies, specifically as it relates to Membership Rewards:
Transferable points currencies are valuable for hedging against devaluations
At least Julian acknowledges this point… sort of. As I said above, transferable points currencies aren’t valuable because they get you redemptions that aren’t otherwise possible, but rather because they keep your options open.
A transferable points currency is akin to investing your money vs. storing it under your mattress. Yes, the value of transferable points currencies can fluctuate. But that’s a good thing. Sometimes they lose partners or their partner programs devalue, while other times they add more transfer partners or their partner programs open up new redemption opportunities.
In the case of Membership Rewards, I’d agree the value of Membership Rewards points fell a few years back when:
- They lost Continental OnePass as a transfer partner
- Aeroplan devalued their award chart and began imposing fuel surcharges on many award redemptions
Conversely, the value of Membership Rewards points increased when:
- Singapore KrisFlyer began allowing saver level Suites Class award redemptions, and more recently began allowing Suites Class redemptions for two people on flights from the US at the saver level (imagine how much your girlfriend would enjoy that ride, Julian).
- British Airways switched to a distance based award chart, which in many ways was a huge devaluation, but at the same time has lead to so many amazing values as well, like domestic award redemptions, transatlantic award redemptions at great rates (on Aer Lingus, airberlin, just to name a couple), etc.
- Delta SkyMiles stopped imposing fuel surcharges on Virgin Australia awards, which is one of the best ways to redeem miles for business class between the US and Australia
Transferable points currencies are more valuable – not less valuable – when they have overlapping transfer partners
What about international partners? AmEx has British Airways as a partner. Great. So does Chase and SPG. Who else? Virgin Atlantic. That’s good. Except so does Chase and SPG. Sensing a trend here?
Ahhhh, but wait! AmEx Membership Rewards has Singapore Airlines, and Singapore has their infamous Suites Class. That’s an excellent redemption opportunity. Clearly American Express has a “sweet” partner right there.
Except that SPG also has Singapore as a partner. And Chase just added them too. And then so did Citibank Thank You. Yeah, you heard me… Citibank Thank You points can now be transferred for the same premium Singapore Suites and at the same 1:1 transfer ratio as Membership Rewards. Aren’t these are the same Thank You points people were trading for Magic The Gathering cards just a few months ago? At this rate it’s just a matter of time before 12 stars at Starbucks gets you halfway to a business class redemption on Singapore’s fifth freedom flight between New York and Frankfurt.
That’s a great point, and it actually makes Membership Rewards points more valuable, and not less valuable.
Most people don’t have the ability to earn millions of points per year, so being able to “pool” points from various currencies is awesome.
Yes, British Airways Executive Club partners with American Express Membership Rewards, Chase Ultimate Rewards, and Starwood Preferred Guest. Yes, Singapore KrisFlyer partners with all three plus ThankYou points.
And that’s awesome, because it means it’s easier to get enough points for a free redemptions. If you earn 50,000 points in each of the transferable points currencies, isn’t it a huge win to be able to combine all four towards a Singapore Suites Class award?
I always talk about the benefit of diversifying your points without overdiversifying. When multiple transferable points currencies have the same transfer partners, that’s a way to diversify your points currencies without overdiversifying.
Win, win, win…
Transferable points currencies are valuable for maximizing category bonuses
From the perspective of someone looking to maximize points, one of the greatest benefits of transferable points currencies is that their credit cards often come with extremely lucrative category bonuses.
Unless Julian has a post next week about how earning points is overrated and we should use credit cards with the lowest category bonuses, I’m happy earning my KrisFlyer miles at a slightly accelerated rate:
- Citi Premier® Card (review): earn 3x ThankYou Points on airfare, hotels, gas stations, dining and supermarkets, and 1x ThankYou Points on all other purchases.
- 2x Ultimate Rewards points on dining and travel through the Chase Sapphire Preferred® Card
- 5x Ultimate Rewards points on office supply stores, and on cellular phone, landline, internet, and cable TV services, through the Ink Business Cash® Credit Card
- 4x Membership Rewards points at restaurants globally and 4x at US supermarkets (up to $25,000 per year and then 1x), and 3x Membership Rewards points on airfare through the American Express® Gold Card
More transfer partners doesn’t make a program worse
Yes, Membership Rewards partners with El Al and Frontier and has less than stellar transfer ratios to Starwood, but that doesn’t somehow devalue the best transfer partners.
That’s like arguing that airlines devalue their mileage programs when they add more ways to redeem miles for merchandise, experiences, etc. For the most part I’d never redeem points for that, but options are options.
I’ve helped people redeem literally hundreds of millions of Membership Rewards points over the years, and all but a handful of times I’ve redeemed Membership Rewards points through the following airline transfer partners:
- Air Canada Aeroplan
- ANA Mileage Club
- British Airways Executive Club
- Delta SkyMiles
- Singapore KrisFlyer
I’m quite content redeeming Aeroplan miles for travel to Europe in Swiss business class with no fuel surcharges and two stopovers in addition to the destination for 90,000 miles roundtrip.
I’m thrilled to redeem ANA Mileage Club miles for Lufthansa first class roundtrip between New York and Frankfurt 100,000 miles plus ~$800 in fuel surcharges (or maybe Julian would rather burn 220,000 MileagePlus miles without fuel surcharges because tickets purchased using miles should be “free”).
You can’t beat 50,000 British Airways Avios roundtrip for Aer Lingus business class between Boston and Dublin on Aer Lingus.
Delta SkyMiles? As much as I complain about the program, by comparison their program has increased in value over the past couple of years.
Who cares that they’re adding 47 tiers – if you’re redeeming SkyMiles right, you shouldn’t be redeeming them for travel on Delta. I’ll gladly redeem 125,000 Delta SkyMiles for roundtrip Virgin Atlantic Upper Class between the US and Europe.
And Singapore KrisFlyer? Need I really say anything? Nothing I love more than a double bed in the sky!
In all honesty, kudos to Julian for taking the contrarian view and doing so hilariously.
It’s just a shame he’s wrong. 😉