How can AMEX Membership Rewards Reduce Your Bills And Subsidise Travel?

Back when the world wasn’t in lockdown, borders weren’t closed and my idea of a holiday wasn’t a day sunbathing in the back garden, I waxed lyrical about the benefits of airmile reward credit cards. In normal circumstances, when planes fly a regular schedule and we do not need to worry about airline failures, job losses or contracting Covid-19, those credit cards can really help you travel in style. For instance, I use the AMEX membership rewards that I earn from credit cards to fly business class or first class for the price of an economy ticket.

Understandably you might feel that these cards are a waste of time right now. You can’t travel and you don’t want to add to financial woes but there is one card that I really think you should consider.

Introducing AMEX Gold

The AMEX Gold card allows you to earn membership rewards that you can transfer to several airlines, but you can also use the membership rewards to pay for purchases. This means that you can collect points on your AMEX account and use them to buy lockdown essentials like wine and gin. Or, when you are confident enough to fly, you can transfer them to the airline of your choice and redeem for a reward flight. Note, you will still have to pay taxes and fees. These are not free flights but they can save you a fortune should you wish to upgrade without breaking the bank.

Here’s a reminder of the key benefits of the AMEX Gold card.

AMEX Gold card benefits

1. New cardholders earn 20,000 membership rewards points when they spend £3,000 in the first six months of membership. To qualify, you must sign up before 29^th June 2020 and if you have held any other American Express card in the last 24 months, you will not qualify for the sign-up bonus. Use this link to sign up for the AMEX Gold and you will earn an additional 2,000 membership rewards. See, it pays to read my blog!!
2. Thereafter, you earn one membership point for every £1 spent on the card and two membership points for every £1 spent directly on airlines. Finally, if you spend money at American Express travel, you earn three membership rewards for every £1 spent. If you spend £1,000 a month on your card, you will, therefore, earn a minimum of 32,000 membership rewards in year one.
3. Cardmembers receive two complimentary airport lounge passes per year. You can use these at any of the 700+ Lounge Club premises around the world. Take note, however, many lounges are currently closed due to Covid-19 so it may be some time before you can redeem these passes.
4. You can earn an extra 6,000 AMEX membership rewards for every friend you successfully refer (up to a maximum of 90,000 points a year!). This includes someone living in your own household. Be sure to stagger sign ups so that you can easily achieve the minimum spend requirement of £3,000 in six months.

Note, for the last few years the welcome offer has been a much lower amount of 10,000 rewards when you spend £3,000 in three months so this is an exceptional offer.

AMEX costs

Annual fee

The card has an annual fee of £140 but this is waived for the first year. I usually recommend that you refer your partner before the 12-month period expires and then cancel your membership to avoid this charge.

That way, you earn 6,000 for referring your partner and you can earn another 32,000 membership rewards assuming the sign-up bonus does not change. Note, please check the terms before you sign up because it is likely that this offer will not continue once signs of an economic awakening occur.

Also, you will miss out on the 10,000 membership rewards points you can earn if you retain the card beyond the first anniversary and spend £15,000 during the anniversary year.

APR

The card has a whopping 56.5% APR. This is not the card to help with cash flow during lockdown. If you are likely to experience any financial difficulty in the coming months (I sincerely hope this won’t be the case) then you would be much better looking for a card with a 0% offer.

This card is only suitable for those who will pay off their balance in full each month. Otherwise, this becomes a very expensive hobby indeed.

How can membership rewards help you during lockdown?

Redeem for airline loyalty points

If your coping mechanism during lockdown is to think about future holidays, then you may want to research which airlines you could transfer these reward points to. Once we are able to travel freely, you may find you have sufficient points to book business or first-class travel for less than the price of economy.

There are 12 airlines which are transfer partners. These include British Airways, Virgin Atlantic, Emirates, Singapore Airlines and Etihad to name a few. I recently accumulated a ton of points on my AMEX Gold which I then transferred to Virgin to book flights to China in September (bad timing, I know!).

Join the respective airline programmes

You will need to join the respective reward programmes of the airline you fancy flying with to be able to redeem reward points. For instance, I usually transfer my membership rewards to British Airways and have used these to fly First to Vancouver and China, and Business Class to Quebec, Seoul, and Japan amongst others. To do this, you must be a member of the British Airways Executive Club.

With Virgin, you will need to sign up to the Virgin Flying Club.

There is however, no need to sign up to every airline as many airlines are part of an alliance. As long as you sign up to the reward programme of one of the alliance members, you can earn points from flights with all member airlines. You can find details of the 13 member airlines of the Oneworld alliance here. I have booked flights to Helsinki in October using my British Airways AVIOS points which I earned after I transferred membership rewards from the AMEX Gold account.

Redeem for purchases.

Alternatively, if you are currently trying to be savvier with money then you can use your membership rewards to pay for purchases. When you register the card, you can elect to use points for purchases.

I paid for some headphones this week using points. As you can see from the screenshot below, this cost me 2,200 points and each 1,000 AMEX membership rewards give you £4.50 off your purchase.

I would normally consider good value to be around 1p per point so this comes in considerably worse with each point getting you less than 0.5p of value.

However, if you are highly sceptical about the chance of survival of some of the major airlines you may take the view that it is better to get some value than no value. Or you may wish to simply manage your own cash flow short term.

To use points towards purchases on your AMEX home dashboard you will see a button on the right hand side saying use points for purchases. Simply click this button and a list of transactions appears. You can then decide which ones to pay for with AMEX membership rewards. This then appears as a credit on your statement. Simple stuff!

Have your say?

Have you used AMEX membership rewards to pay for purchases or indeed another a card? How would you prefer to spend your points currently?