Points to cash - What are they trying to achieve?

[cjtatv]

Recieved an offer from AMEX last year stating "And the good news is, you currently have 413,234 points, giving you the equivalent of $2644.70 to redeem for whatever reward you have in mind".

As tempting as that offer was, I decided to book 2 Virgin Atlantic Sydney to London Rtn Upper class tickets (Virgin web price $32,500.00) for 360,000 points leaving with 60,000 app. points to play with.

I feel slightly insulted that they are undervaluing my hard earned points by so much, and wonder what they are hoping to achieve.

It's like the con where companies try to buy shares off old people for less that they are worth.

 

[Alanslegal]

I feel slightly insulted that they are undervaluing my hard earned points by so much, and wonder what they are hoping to achieve.

like many of us here, we realise that the some of the CC offers for points to cash / rewards is quite low however there will always be people out there who think it's good value or easy to redeem or don't want to wait too long accumulating more etc.....

an example, is my sister, she regularly redeems CC points for household items......last item was in christmas where she got herself a Sunbeam rice cooker which cost her 16,000 points.... i went to take a look at BigW and the same item was selling for $50! I would have easily given her $50 for her to t/f the points to me....

 

[simongr]

I am guilty of that myself. I had 60K+ of Amex points and used that for a Wii games console. Sure I could have bought one cash for $350 but with Xmas shopping mounting up and a horrendous expense on new pans it was a nice freebie. I mostly use Amex points for QF upgrades to F though - and that is probably not great value for money...

 

[serfty]

... I mostly use Amex points for QF upgrades to F though - and that is probably not great value for money...

IMO, that's close to the best value one can get from a QFF(neeMR) point.

Return travel MEL/SYD-HKG in J is ~$6300 return, F is ~$8230. That's a difference of ~$1930, it would require a total of 50K QFF points to upgrade each way so that ~3.9¢/Point value.

 

[cjtatv]

OOPS a mistake: Virgin website price is $16000.00 not the 32k.

That takes the calculation from being completely, unbelievably ridiculous to just completely ridiculous

 

[simongr]

I agree that it is great a use for them - but my "issue" is more about the extravagance of me blowing the points so I can sip better champagne - better value for the whole gr family would be on things the whole family can enjoy - hence the Wii - a gaming console that mrssimongr might enjoy as it is not just about hack and slash violence games

 

[JohnK]

So Amex is valuing MR points at 0.64 cents each!

Amex is only trying to reduce their MR point liability and as mentioned by others there are people who would rather take the cash or gifts.

 

[lovetravellingoz]

....and there are others do who may well prefer to takes flights....but whose yearly spend is such that they are not likely to earn enough points to ina reasonable period.

For such people the ability to get cash or gifs is a welcome one.




On Amex for cash...I was just sent a promotion stating that there was 20% off the normal redemptions rate.

So 104,000 points would get almost 1 cent per point.

I can't remember all the conversion rates but the conversion rate worsened slightly for lower redemptions.


For me I will stick to flight redemptions......but it is a good thing that there is an option for those that want it of other redemptions at lower point redemptions....but yes the redemption rates are not as attractive.

 

[lovetravellingoz]

It's like the con where companies try to buy shares off old people for less that they are worth.

For it to be a con you would need to know what value AMEX transfer to Virgin for each point ...

For your 360,000 points would they supply Virgin $16,000??? Answer not likely...

What rate do they transfer at? I don't know...

I would guess that it would be closer to 1 cent per point than the "pereceived" 4 cents per point you have burn at with Virgin.


With Virgin......they would most likely not value the tickets at $16,000 with their yield management indicating a much lower "true" value.



Remember that while FF schemes were originally about rewarding loyalty (which many FF schemes including QF seem to have forgotten) that they were also very much about trying to use empty seats (which cost the airline little) as a reward with a pereceived much higher value.

 

[FL360]

They are trying to get rid of their points liability easily,
nice try !

Always remember you get the most of your points by redeeming flights
EARLY, I got myself premium economy HKG=>SYD after Xmas, around that period is $3444 return, half is $1722, minus ~$100 in tax/SC for points claims,
that's $1622 / 45000, it is 3.6cents/pts ..

Of course if I choose business class I can get more value for my pts as well, but at the end of the day I just want a decent seat with nothing touching my knees for 8+ hours...

 

[lovetravellingoz]

I think the point that many are missing is that while yes one CAN redeem for a value of 3 or 4 cents per point that most people do not.....therefore it is very unrealistic expectation for AMEX to redeem points for cash at the highest possible rate...rather than at a level somewhat nearer what most redeem for.

Secondly it does not actually cost the airline 4 cents per point to provide you with business class etc

I too redeem for more than a cent per point...but most people do not.




It is a bit like hotel rooms......do you pay the maximum rate than any person has paid, or do you try and get the room as cheap as possible? Would you pay the full rate just beacuse the hotel clerk says that you are ripping him off if you do not pay the maximum that anyone else had to pay.

The reality is that the price for anything is fluid.......with high and lows.

If you want cash then expect to be offered a low rate and not a high one.

Buy (redeem) for something that the seller gets cheaper than you can make it for youself then you can expect to get a good rate.


In addition if Amex did say redeem point for cash using the rate of 4 cents per point.....I could guarantee that redemptions for flights for disappear in an instant with everyone taking the cash up front. Why would you not?

 

[Mal]

I redeem for cash sometimes from my credit cards. (but also redeem for points in other loyalty schemes too quite a bit). While it is a rip-off rate compared to other redemptions into loyalty schemes, sometimes I have plenty of points in the various Credit Cards and would rather some cold cash for my points.

I don't see it as bad, just another use for my points.

Amex also have 'discounts' at various times for conversion into cash.