American Express recently changed the terms for its OPEN Savings® program for business card holders. Previously you could only earn cash back in the form of a statement credit. Now, you have a choice between cash back or bonus Membership Rewards points. Some merchants will earn you a 5% statement credit or 2 bonus points per dollar. Other merchants will earn you a 10% statement credit or 4 bonus points per dollar.
Which is the better deal?
Always get the cash back. Both of these offers value Membership Rewards points at 2.5 cents each. The only difference is that some merchants offer a more generous reward. Deals We Like suggested earlier this week that your choice of points or cash back should depend on how you value Membership Rewards points. Many people value them at less than 2.5 cents, but I can imagine a few cases where they would be worth more (usually for specific award redemptions when transferred to other loyalty programs).
Regardless of how you value Membership Rewards points, you can buy them at any time for the same price: just 2.5 cents each. The benefit of taking cash back through OPEN Savings is that you can get the cash now and buy the points later, only if and when you need them. There is a risk that points may become more expensive to purchase, but at the same time you can earn interest on your cash while points are subject to devaluation.
Could you theoretically want more points than you can purchase? Of course. But I think that is going to be a rare situation for most people. Besides, the bonus points you earn through OPEN Savings are capped to a certain amount of purchases each year. You can only receive OPEN Savings benefits on up to $10,000 in purchases from Hyatt each year, for example, which limits you to an extra 20,000 bonus points. Many cards will let you buy up to 500,000 points.
How Many Points Can I Buy?
Depending on the card you have, you may be able to buy either 100,000 Membership Rewards points or 500,000 Membership Rewards points each year. This number is capped for the individual’s Membership Rewards account regardless of how many participating cards you have linked to it. For example, I have both a Premier Rewards Gold card and a Business Platinum card linked to the same account, but my limit remains capped at 500,000 points. (The positive side to this is that Business Platinum cardholders have a few additional benefits, and those are conferred on all of my points regardless of how they were earned.)
The list above was taken from the Membership Rewards Terms & Conditions, which you may wish to read in full. The topic “Buying Points” is covered about halfway through.
I’ve read some conflicting comments on whether you can buy points any time you want, just to add to your account, or if you need to wait until you are making a specific redemption — in other words, if you have to wait until your account hits zero and only then purchase the remaining amount. So I called Membership Rewards just to be sure, and I was told that I can buy points whenever I want, as long as I don’t exceed that annual cap.
What If I Need More?
There are a couple options if you need more than 500,000 points in a single year. You could combine points with a spouse. Generally Membership Rewards doesn’t notice if Person A transfers points into the loyalty program of Person B. If I need 1,000,000 miles with KrisFlyer, Megan and I could each buy 500,000 points and transfer them to my account over at Singapore Airlines.
You could also plan ahead, my favorite mantra. Buy 500,000 points in December and another 500,000 points in January. Then you’ll have 1,000,000 Membership Rewards points all in your account. This is why I was concerned about whether American Express required you to first drain your account before buying more.
Don’t forget you still have until June 30, 2013, to use the Points Advance feature from American Express. This is being phased out after that time due to reports it was rarely used. You have the opportunity to request an advance depending on the type of card you carry. Platinum and Centurion cardholders can get 60,000 Membership Rewards points, but most other cards can get only 15,000 points. (A few that you probably don’t carry can get just 5,000.)
You’ll then have a year to earn them back (meaning as you make purchases you won’t get more points but the size of your “loan” will be reduced). If you fail to earn back all the points by the end of the year, you will need to buy the remaining number at the same price of 2.5 cents.
You can see below which cards allow you to advance what number of points. Remember to check the Terms & Conditions to read up on how the Points Advance feature works if you take advantage of it while it is still around.