Making the Most of American Express Rewards Points

Last year, I signed up for an American Express Business Gold card thanks to word around the money blogosphere that I would get 25,000 points for signing up which I could redeem for a free airline ticket. I do a lot of flying, so that reward really appealed to me.

When I actually went to redeem the points, I found that the reward wasn't quite as good as I had anticipated. I could only redeem my 25,000 points for $250 towards a flight, and I couldn't find a flight that got me where I needed when I needed for $250. I didn't see the point in paying any amount of money for that plane ticket when I had plenty of other frequent flyer miles to redeem, so I redeemed some American Airlines miles and took my trip.

What to do with my Amex Gold miles, though? There are a dizzying array of options for redeeming miles. You can get any of the latest iPod models, a watch, a white gold ring, gift cards, travelers checks. While at first this selection might sound fantastic, it's actually not. The points have higher or lower values depending on what you redeem them for. For example, I could redeem about 20,000 points for a 4GB iPod Nano Video, which costs $140 at Amazon. Alternately, I could redeem 20,000 points for $200 worth of gift cards at the Gap, Barnes and Noble, FTD, Bloomingdales, Bath and Body Works, or a few other places. If I wanted a more flexible American Express gift card, though, my points would lose half their value: a $25 Amex gift card costs 5,000 points. Clearly, the best value was to go with one of the rewards where I received a value of $10 for every 1,000 points.

Or was it? I then discovered that I could transfer my Amex Gold points on a 1:1 basis into frequent flyer miles. My Frontier account was only 3,000 miles away from a free ticket. If I wanted to buy those miles, which I was strongly considering, it would have cost me $84. If I wanted to continue earning miles at a snail's pace through my Frontier credit card, I would have had to spend $6,000 on that card, which would take a long time.

My Delta frequent flyer miles also needed some help. I only had 2,400. I decided to get an extra 17,500 by applying for their credit card, which has no annual fee for the first year. I got another 2,500 miles by adding an authorized user to my account. That left me only 2,000 miles away from another frequent flyer ticket, so I transferred 2,000 Amex Gold points to my Delta account.

That still left me with a whopping 20,000 points to redeem, which I traded for some of the high value gift cards mentioned above.

Assuming that a free plane ticket is worth at least $250 (usually at least $300, in my experience), signing up for just two rewards credit cards is netting me $700+ in free stuff.

To summarize, here's what I did:
-applied for and got approved for a new Delta credit card: 20,000 miles (free)
-transferred 2,000 points to delta ($1.00 service charge) = $250+ free plane ticket
-transferred 3,000 to frontier ($1.50 service charge) = $250+ free plane ticket
-Redeemed 17,500 points=$175 at the gap
-2500 points=$25 at bath and body works

Talk about a steal. If you needed some inspiration to keep your eyes peeled and take advantage of the fantastic credit card bonuses that come along occasionally, this should motivate you. I made over $700 with very little effort. However, these deals are not for everyone: if you don't manage credit well or miss payment deadlines, steer clear. The fees and interest you might rack up will negate any rewards you earn.


Digg! * Stumble Upon Toolbar
Subscribe in a reader* Share on Facebook


Related posts:

How I've Earned $1250 in Free Money This Year


Photo by VANnBER

Credit Card Interest Repayment Calculator - enter in information for your current credit cards and a pay-off schedule will be calculated for you.Credit Balance Transfer Calculator - input your current credit card details (balance and interest rate) and the details of a card you're looking to transfer to, and calculate your potential savings.

2 comments:

Anonymous said...

I love those tips! thanks!

Anonymous said...

I've been using my AMEX Gold less and less. Continental/United (my home airport hub) has left the program. Holiday Inn/Priority Club has left the program. Shopping the catalog is way too expensive in points. The rule of thumb is 1,000 points = $10.00. Figure out what you would be paying in dollars and you will see that you are better off buying the items in from another source (like Amazon) for cash. I'm going to switch my Gold card for a SPG (Starwoods) card. 1 point for $1.00 purchase. To transfer Gold points to my Starwoods is 3 Gold points for 1 Starwoods point. Awful. Gold card is not the value that it used to be to me.