Shopping with Points

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Earning and collecting points with your credit cards can be a fruitful activity when done well. It may require a spreadsheet or two, but by being diligent and intentional with your method of payment, the money you are spending each year could earn you thousands of dollars worth of rewards!

But when it comes to redeeming your points, you must be careful. All points cards offer a myriad of options for redemption, but just because you have options, doesn’t mean you should use them.

Take for instance the American Express Shopping portal. Your hard-earned points can be used to buy things on Amazon, purchase gift cards, pay your bill and more. But the only option that will help you earn the full potential of your points, is to transfer them to a travel partner.

Just because you have options, doesn’t mean you should use them.

Value

When trying to quickly determine if something is a good deal, I will use TPG’s point valuations to see whether or not the value I’m considering is a smart transaction. As a rule of thumb, the “easy” redemptions such as buying on Amazon will result in much lower redemptions. The more complicated endeavors, such as transferring points to a travel partner, are more valuable.

Case Study

For a quick example, let’s pretend after our signup bonus, and efficiently targeting our spend for the last year, we find ourselves with 180,000 American Express Membership Rewards points earned from our AMEX Gold and Platinum cards.

We explore our options on our 180,000 points using the AMEX website, and find three choices that immediately interest us: 1) We can purchase anything we want on Amazon for a total of $1,259; 2) we can redeem an offer for a brand new MacBook Pro valued at $1,299; or 3) we can transfer our points 1:1 to Delta.

We’ve been considering a trip to Paris, so decide to take a look at options for flying from SFO to CDG. We find that for the 180,000 points, we can book a roundtrip ticket in Delta One; a first class cabin boasting lie-flat seats and a luxurious international travel experience; the cost of this same ticket using USD cash, is a staggering $3,792.22! By paying cash for our Amazon and computer purchases, and instead using points on our airfare through a point transfer with Delta, we redeem our 180,000 points at a value 3X of the Amazon redemption for $0.021 / point (exceeding TPG’s estimated value of $0.020 / point) and have an unforgettable flight to Paris.

By using points on airfare through a point transfer with Delta, we redeem our 180,000 points at a value of $0.021 / point and have an unforgettable flight to Paris.

Addendum: Taking advantages of promotions

So while you should almost never use your points for online shopping, sometimes using points with shopping partners may make sense if a special promotion is involved.

For instance, take this promotion below that I received from Amazon last month: In short, I would receive 20% off my purchase if I used points. But upon further examination of Term 3, we see the exciting detail: I receive the offer if “a portion” of my order is paid for with points.

Putting this theory to the test, I enrolled for the promotion and proceeded to checkout. I opted to pay for a portion of my order, a very small portion of $0.01, with points (1 point).

This worked. As a result of redeeming one point at checkout towards my overall total, I received 20% off my entire purchase while still being able to pay cash for the rest.

In closing, keep an eye out for the special promotions, but otherwise shopping online with your points is never the right decision. Instead, by capitalizing on the promotions of travel partners, and transferring your points to them before you book, you’ll be able to take your rewards game farther and build some incredible memories along the way.