A new way to use your Amex points

How long are you willing to wait for a credit card reward? If you’re saving for a flight or even a fancy toaster it may take years to collect enough points to secure your reward, but thanks to a new American Express program you may not have to wait at all.

Under a new program that launched in September Amex now allows its cardholders to redeem their points whenever they see fit. After making a purchase with their card they can access their Amex app or go online and apply their reward points against the amount paid.

The new program gives cardholders added flexibility to redeem points on smaller purchases—if you want to shave $50 off your grocery bill, you can—and empowers consumers to spend points on what they please, plus it eliminates the aggravation of trying to find something to redeem your points with in Amex’s rewards catalogue.

The redemption value is pretty straightforward (although the value of the points varies depending on whether you have a consumer or business card). On the Amex Gold card 1,000 points is equivalent to $7 (or $0.007 per point), whereas the redemption rate for small business cards is 1,000 for $10 (or $0.01 per point)—a 30% difference.

The question is should you redeem your Amex points this way?

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The simple answer is: maybe. As you’ll see in a moment, it pays to do the math to see if you’re getting the best value.

Consider the following. Let’s say you want to use your points for a new 128GB Apple iPad mini 4, which retails for $499.99 ($564.99 after tax in Ontario). To get the device through the catalogue you’d need to redeem 100,800 points. That works out to less than $0.006 per point, but if you redeem your points through Amex’s new program you’d only need to redeem about 80,700 points—a 20% savings.

That’s a significant difference; it might take an average cardholder charging $2,000 a month to their card more than half a year to acquire those 20,000 points again.

But if you’re hunkering down for a new Breville Die-Cast 4-Slice Smart Toaster, which retails for $249.99 ($282.49 after tax in Ontario), you’d actually be better off getting it through Amex’s catalogue. In Amex’s catalogue you’d need 30,700 points, whereas through the issuer’s new program you’d burn up more than 40,000 points.

If you are looking to redeem your points for something that appears in Amex’s catalogue, then it’s worth your effort to do the math given how long it can take to accumulate those points in the first place. If the items in the catalogue don’t grab you, then the new program should be a welcome development.

Of course if you want better value for your points, use them for travel. On the Amex Gold card 1,000 points is equal to $10.