Rolling with the Punches

On October 1st, American Express modified it’s transfer rate to British Airways from a 1:1 to 5:4. You’ll have to transfer 250 Membership Reward points for 200 Avios. To fly a short haul (probably the best way to use your Avios)  it will now cost you 5625 Membership Rewards instead of 4500 Membership Rewards (5750 since you have to transfer in 250 increments). Although it sucks that this is happening, is it as bad as some people make it seem? 

Currently, Membership Rewards, Ultimate Rewards and SPG transfer to British Airways, but Ultimate Rewards and SPG transfer at 1:1 (possibly 1:1.25 for SPG), while Membership Rewards does not. For this comparison, I used the Chase Sapphire Preferred, SPG and American Express Everyday Preferred.

**I could have put the Chase Freedom with the Sapphire Preferred, but the others are only 1 card and I didn’t add other American Express on top of the Everyday Preferred. I felt this kept things equal between the options.**

I know your spending could be different, but to keep spending equal, I used the Bureau of Labor Statistic, on average American spending:

Credit Card Earnings
Category Yearly Spend Chase Sapphire Preferred SPG American Express Everyday Preferred
Gas $2,400 2,400 2,400 7,200
Entertainment $2,500 2,500 2,500 3,750
Groceries $4,000 4,000 4,000 18,000
Dining Out $2,600 5,200 2,600 3,900
Apparel $1,600 1,600 1,600 2,400
Transportation-Travel $6,600 13,200 6,600-13,200 9,900
Healthcare Expenses $3,600 3,600 3,600 5,400
All Other Expenditures $3,300 3,300 3,300 4,950
Total $26,600 35,800 26,600-33,200 55,500

If you spend every single travel dollar at an SPG property you would earn 13,200 SPG points, but if you don’t you’ll receive less, so I made it a range. The American Express Everyday Preferred earns the most points, the Sapphire Preferred or SPG could be in 2nd place depending on spending habits. Now that we have point totals, which one will be the best for transferring to British Airways?

Chase Sapphire Preferred:
Since Chase doesn’t offer transfer bonuses when transferring your Ultimate Rewards and you only earn 2x on travel and dining, you will have 35,800 Ultimate Rewards for transfer. Not a bad number and since it is a 1:1 ratio, that means 35,800 Avios!

That is enough for 7 one-way short haul tickets (almost 8). That could lead to some serious savings and if you do have the Chase Freedom or an Ink card, your Ultimate Reward earnings could be more!

SPG:
SPG offers a 5,000 point bonus if you transfer 20,000 points to an airline, so this will give us even more Avios! Depending on the hypothetical spending of this person, they could have 31,600 to 38,200 Avios. This transfer rate is 1:1.25 (when you transfer 20,000 points), making it a better transfer rate than the Chase Sapphire Preferred and the Everyday Preferred. Even at the better transfer ratio, you could still end up with less Avios than you did with the Sapphire Preferred.

Using your SPG points, you could fly 7 to 8 one-way short haul tickets. This is right on track with the Sapphire Preferred, but SPG points are much harder to earn and I think using them for flights is not a good option. To earn those 7 to 8 flights, you need to spend $20,000! That’s my opinion, but there isn’t a wrong way to use your points.

American Express Everyday Preferred:
Now lets remember, the sky is falling, using Membership Rewards for Avios have become a terrible option since it no longer transfers at 1:1. so why even bother….

Occasionally, American Express offers transfer bonuses to airlines, including British Airways. I did not put a transfer bonus into my calculation and if one comes along great, you might be able to take advantage of it.

Based on the spending above, this person would have 55,500 Membership Reward points! That is a pretty good amount and can do a lot for someone. Compared to the others, this is the worst option for transfer, since the transfer rate is 250:200. Even with the less than stellar transfer rate, you will “only” receive 44,400 Avios. That is more than both SPG and the Sapphire Preferred! Even at the less than stellar rate, you have more Avios than a program that transfers at 1:1 and another a 1:1.25.

This would be enough Avios for 9 one-way short haul tickets (almost 10). That is one more than SPG and 2 more than Chase, if you’re keeping track.

Nobody is every happy to see a change occur where it cost more points for a trip. When you break this down, it isn’t as bad as it seems. This game is always changing and you need to adapt to the changes. If you don’t like the points game, that is perfectly fine! There are plenty of cash back cards out there to help you make your travel for less.

You should always do your own homework to see if any transfer option works best for you. To think that transferring Membership Rewards to Avios is a bad option, I would reconsider. It might not be great at 5:4, but it still a valuable option you should consider if using Avios

My one wish is that Citi adds British Airways to their transfer partner list. They would possibly be the best option if available.

What are your thoughts on the American Express change? Do you think Membership Rewards are becoming less useful?

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