What are Membership Rewards points for?

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It is a truth universally acknowledged, that a travel hacker in possession of Membership Rewards points, must be in want of a way of disposing of them.

This is the main reason that until this year I avoided the American Express Membership Rewards ecosystem. I know what to do with Chase Ultimate Rewards points (transfer them to Hyatt) and Hilton Honors points (book 5-night award reservations) and US Bank Flexperks Travel Rewards points (redeem them for 1.5 cents each on paid airfare).

But for as long as I’ve been travel hacking, the main feeling people have expressed about Membership Rewards points was frustration: yeah, they’re easy to earn, but what the hell do you do with them once you have them?

Now that I’ve got a gazillion of them, I feel that frustration firsthand. Here’s what I’ve gleaned over the years about how people really redeem them.

Cash out through co-branded Platinum cards

One reason Membership Rewards points are so hard to redeem is that their cash value, unlike Ultimate Rewards (which can be redeemed in unlimited quantities for 1 cent each), is discouraging. You can redeem them for statement credits at 0.6 cents each, or for travel through the American Express reservation portal at 1 cent each (or slightly higher for Platinum cardholders, under certain conditions).

“Invest with Rewards” is a feature of the Charles Schwab co-branded Platinum credit card that lets you redeem up to 1,000,000 Membership Rewards points per year at 1.1 cent each for deposits into a Schwab investment account.

This is a popular choice for a lot of people, but it’s also an admission of defeat — and an expensive one, since the Schwab card has a $695 annual fee, not waived the first year. If you’re paying 3% “all-in” to manufacture bonus spend that earns 4 points per dollar, plus a $695 annual fee, you’re only clearing $2,805 per year on $250,000 in manufactured spend.

That’s not for me, but it is a popular choice so I wanted to make sure readers were aware of it.

“Substituting” Ultimate Rewards transfers

The most appealing approach to redeeming Membership Rewards points is to use them as a substitute for Ultimate Rewards transfers. Since transfers to World of Hyatt are so valuable, this is a true “penny saved/penny earned” situation: every point you’re able to redeem from your Membership Rewards account instead of from your Ultimate Rewards account is “worth” whatever value you get from World of Hyatt transfers. It’s not uncommon to get 3 or 4 cents per point in value when redeeming World of Hyatt points, and it’s possible to get much more value if you’re working at it.

This is most obvious when Chase and American Express share a transfer partner. Here are the programs they have in common:

  • Aer Lingus Avios

  • Air Canada Aeroplan

  • Air France KLM Flying Blue

  • British Airways Avios

  • Emirates Skywards

  • Iberia Plus Avios

  • JetBlue trueBlue

  • Marriott Bonvoy

  • Virgin Atlantic Flying Club

Note that all the Avios programs (Aer Lingus, British Airways, Iberia Plus, and Qatar) have miles that can be transferred between the programs, but obviously not everyone has all four programs set up and connected to their credit card rewards accounts, so I mention them separately as well.

Another method of substitution is to transfer “similar enough” miles. For example, Star Alliance partner award availability can be booked with both United Mileage Plus miles (transferred from Chase Ultimate Rewards) or Air Canada Aeroplan miles (transferred from either). Where award space is available in both programs, then saving Ultimate Rewards points by transferring Membership Rewards points to Aeroplan is another way to preserve your Ultimate Rewards balance for higher-value redemptions.

Betting on the Hawaiian-Alaska merger

One interesting alternative that I would consider “low-” but not “no-risk” is preemptively transferring Membership Rewards points to Hawaiian Airlines HawaiianMiles. The merger recently passed the Department of Justice’s review process, so it has a reasonable chance of being finalized at some point. After that happens, I would guess the airlines would take a year or two to align their reservation and award systems, and at some point I’d expect Hawaiian to enter into the oneworld alliance, as Alaska already has.

Once all that has happened, miles might become transferrable between the programs, or used from either program to book oneworld alliance partner flights.

There are a lot of if’s, and’s, and but’s in there, but if you’re sitting on more Membership Rewards points than you have any idea what to do with, then stashing a few hundred thousand in a HawaiianMiles account is one way to hedge the value of your points. You might regret doing it eventually, but the least valuable point will always be the one you don’t redeem.