Using Miles and Points for Merchandise Is A Horrible Deal!

Besides the standard points and miles redemption options of flights and/or hotel nights, lots of loyalty programs offer the ability to instead purchase merchandise. Recently, American Express emailed me saying that I could receive 10% off all purchases made with Membership Rewards points until April 30, 2015. FullSizeRender (31)

Usually, redeeming points or miles for purchases is a terrible idea, as the amount of value that can be thrown away (often unwittingly) is astounding.

I just need one item to prove my point!

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Here is the Apple MacBook Air. American Express estimates the price of this laptop at $1,199 and, it’s true, the high-end 13-inch MacBook Air from the Membership Rewards online store is the same price at the Apple Store. The price, as marked in Membership Rewards points, is 238,000, so with the 10% off special offer, the price is really around 215,000 Membership Rewards points. 215,000 MR points sounds a like a lot – and it is. Here’s what 215,000 MR points could also buy you:

  • 6 roundtrip, economy-class flights from anywhere in the US to any Hawaiian island, if transferring MR points to Singapore Airlines Krisflyer program to book United award tickets. Or, you could book 3 roundtrip, business-class (i.e. lie-flat beds) tickets and 1 roundtrip, economy-class ticket on the same route. To test prices, I picked a random day in June and a New York-Honolulu economy-ticket was around $800 while a business-class ticket would set you back over $3,400. That’s almost $5,000 or $11,000 in value versus the $1200 value of the computer. That’s 4-9x times the value of the computer!
  • Two economy-class tickets from the US to anywhere on the Indian subcontinent by transferring MR points to Aeroplan – an over $2,000 value. With just another 3,000 MR points, you could also throw in two, economy-class tickets from New York to Montreal or New York to DC – which I would value anywhere from $300-700. The value of these bookings, then, is double the computer’s value.
  • You could also transfer your points to British Airways’ Executive Club and redeem for 14 roundtrip, economy-class tickets from New York to Nashville, perfect for country music fiends or a bachelor’s party, or, ideally, both. Tickets from NYC to Nashville run from $300-$400, so the possible value of $4200-4800 is about 3-4x the value of the computer.

These are just three, small redemption possibilities that show why you definitely shouldn’t use points to buy merchandise if you want to extract maximum value. Stick to flights and hotels!

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