American Express Membership Rewards: An In-Depth Value Analysis

American Express (NYSE:AXP) Membership Rewards can be used in many different ways. One issue with having so much flexibility is figuring out which option provides the best value for the rewards you've earned. We took a dive into the Membership Rewards portal to look at the different redemption options and what the points are worth.

Redemption Options And What Membership Rewards Are Worth

Here's a quick summary of what you can expect the value of rewards to be given the different redemption options. Overall the best options are using the points transfer program, booking flights through Membership Rewards and using them to buy gift cards.

Let's take a closer look at how some of the redemption options work:

Points Transfer Program

The best feature of the Membership Rewards program is being able to tie your American Express account with an airline or hotel loyalty program. This will allow you to transfer your points into the respective Airline or Hotel loyalty points and use them for award bookings. In our analysis of travel related awards programs, we've found many use cases where miles can be used at greater than 1 cent each often averaging greater than 1.2 cents a point. Below is a table with each of the partners and the amount of loyalty awards you'll receive for each Membership Rewards point.

Hilton and Starwood Transfers

You'll notice that there are two exceptions to the exchange ratio, the Hilton HHonors and Starwood Preferred programs. While Hilton HHonors gives you more points for each Membership Reward our analysis of their value has them worth significantly less than a cent each. Overall they're worth around .5 cents to .75 cents a piece. Even with the 50% extra rewards you'll get less value in this transfer than you would otherwise. After conversion you'll likely get between .75 - 1.1 cents per point in value.

Starwood Preferred Guest StarPoints are among the most valuable points around, so it's no surprise that the conversion ratio is so small. The StarPoints are typically worth at least 2.2 - 2.5 cents each, but given the much lower ratio it's probably not a worthwhile choice.

How To Get The Best Value Out Of Transfers

In our prior research on airline loyalty programs, what we've found is that the best time to use your rewards points are for last minute trips. Most flights have a fixed awards cost based on distance flown and generally do not adjust much based on when you book. (Note: You may be liable to pay a late booking charge on some airlines.) These same flights will usually experience massive price inflation with a fare being 2 - 3x more costly.

Shopping

The first way to shop with your points is through the Membership Rewards shopping site that includes about The first is through the Membership Rewards shopping site, that includes 50+ stores spanning many different categories. For most of the products listed, you'll be receive a points "discount" making each point worth .625 cents. A few items are not discounted this way in which case each point is worth .5 cents each.

Amazon

The second option for shopping is by linking your Amazon.com account to your Amex card. In doing so, you'll be able to apply your points at check out instead of paying with dollars. The points are exchanged at .7 cents a piece.

With the much superior conversion of Amazon points, you're much better off using your points on Amazon instead of through the MR store in just about all cases.

Gift Cards

American Express breaks their gift cards into a couple of categories: Travel, Retail, Dining Entertainment and American Express gift cards, with Retail and Dining being the best options. One interesting use case for Gift cards that we found were in the AMC theatre gift certificates. Each certificate is a voucher for a single movie ticket and comes at a cost of 1200 points each. Depending on where you live, NYC for example, theatres charge more than $12 for a movie. This can make the AMC certificates a worthwhile use case since you're able to achieve as much as 1.2 cents per point.

Retail / Dining Entertainment:

Generally speaking the Retail / Dining Entertainment cards have the best value, with most cards priced at 1,000 points for every $10 in value. One exception we did find were cards for the iTunes store where 1,350 points are needed for a $10 gift card.

Expected value: 1 cent per point.

Travel:

The travel gift card section are mostly limited to select brands of hotels and hotel chains. A sampling of the options showed that all the options come in at 12,000 points for every $100 in card value, somewhat less than most retail and dining options. What is interesting however is that the points used for these hotel gift cards are worth more than if you used points to book a hotel through the MR website.

Expected Value: .83 cents per point

American Express Gift Cards:

The Amex gift cards which can be used in lieu of cash are the worst value among gift cards and probably the worst thing you can redeem your Membership Rewards for overall. The cards cost 5,000 points for every $25 in gift card value an altogether terrible deal.

Expected Value: .5 cents per point

Uber

The most recent Membership Rewards option is the use of the points through a card connected account with Uber. You can choose to use the points to pay for a ride with any of the startup's black car services, at which point your points convert at 1 cent a piece. To find out how to do so follow the directions on Uber's website here.

Travel Booking With Points

The Membership Rewards web portal has a section dedicated to travel booking. You can look up and purchase flight and travel arrangements much the same way as other travel websites like kayak. You're also given the choice of spending dollars on your credit card or the membership rewards you've accumulated.

Flights

Opting to use the rewards for flights will yield approximately 1 cent per point as detailed in the graph below. It's comparable rate to the statement credit rates that you'll get on other credit cards so it's not too bad in terms of value. One thing we did notice however was that flight fares on the MR website were typically a few dollars more than on discount sites like kayak.

Hotels

Hotels on the other hand are a very different story. For whatever reason points here are worth significantly less. We looked at a couple of itineraries in Las Vegas and New York and the conversions per point were all .75 cents each. Much worse than for flights and interestingly enough a poorer deal than getting a hotel gift card.

Paying Off Charges

The last option is to use your points to pay off charges that you've already made on your credit card. This acts similarly to statement credit mechanisms that other travel credit cards offer. You're given a list of charges in the latest period and can then select which one you'd like to apply the points to. Credits take approximately 48 hours to be reflect on the account.

The membership rewards are applied at .6 cents a piece when used against charges on just about all the items we tried. It's not a very compelling way of using the points.

Verdict

The major value Amex Cardholders will get from Membership Rewards is through the Airline Transfer program. With few exceptions, most of the top charge and credit cards from Amex with Membership Rewards don't have bonus points for spending outside of using the Amex Travel Website. To get a rewards rate comparable to other cards, the travel benefits are really your only option.