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How Much Are American Express Rewards Points Worth?

One American Express Membership Rewards Point is worth $0.014, on average.However, redemption value varies depending on your destination; some are morelucrative than others. Also, depending on your level of spending, points can beworth more or less.

If you’re like me, then you’re always looking for the best value for your spending. If you’re going to spend the money anyway, you might as well get something back for it, right?

American Express isn’t often talked about in Canada, but itis one of the three major credit card players around, the other two being Visa and Mastercard. Out of the three networks, Amex is the only one to run its own rewards program. Visa and Mastercard let the issuers deal with rewards whichever way they want, whether it’s through a program like RBC’s Avion Rewards or Air Miles. But the American Express rewards program is no slouch.

For the following calculations, I’ll assume all spending is done on the American Express Cobalt Card, as it has the best points earning potential of all  American Express cards. This card also has a $120 annual fee billed as a $10 monthly fee, which will be added into the calculations. All flights were calculated as an average for prices throughout the year from Toronto. The value may increase or decrease depending on the departure point and time of year.

To calculate the rewards earned, I used the following values (travel is a yearly cost divided by 12):

Category

Spending

Gas

$300

Groceries

$500

Drug store

$100

Travel

$200

Other spending

$400

Total

$1,500

The higher your spending, especially in the 5x categories, the more points you’ll earn. If your spending is lower, you obviously won’t earn as many points. For the grocery category I used the average grocery bill for a family of 4, and the other values are based on my own spending.

 

Destination

Average Price

Fixed Point Price

Months of spending needed

Real Value of Ticket After Annual Fee

Real Cashback

Montreal

$302.25

15000

3

$270.00

4.80%

Sydney

$1,656.25

100000

25

$1,406.25

3.75%

Tokyo

$1,593.25

100000

25

$1,343.25

3.58%

Vancouver

$625.00

40000

10

$525.00

3.50%

Winnipeg

$392.00

20000

5

$250.00

3.33%

Poland

$1,109.50

60000

15

$750.00

3.33%

Slovenia

$1,062.50

60000

15

$750.00

3.33%

London

$994.25

60000

15

$750.00

3.33%

Dubai

$1,353.00

100000

25

$1,103.00

2.94%

Cambodia

$1,346.00

100000

25

$1,096.00

2.92%

Chile

$1,282.75

100000

25

$1,032.75

2.75%

Hawaii

$635.50

50000

12

$515.50

2.75%

India

$1,222.25

100000

25

$972.25

2.59%

Paris

$692.25

60000

15

$542.25

2.41%

California

$460.75

40000

10

$360.75

2.41%

Florida

$442.00

40000

10

$342.00

2.28%

Aruba

$524.00

50000

12

$404.00

2.15%

Mexico

$443.50

50000

12

$323.50

1.73%

Colombia

$650.75

100000

25

$400.75

1.07%

There’s a lot in this graph, so let’s break it down. 

Price After Subtracting Monthly Fee

You may be wondering what this means. Remember that this card has a $10 monthly fee. Unlike rewards cards with no annual fee, you’re paying to use this card. Because you have to pay a fee, I counted that as a sortof pre-payment against the reward you receive. The TJX gift card has a value of $100, but it takes three months of spending to redeem it. You are paying the $10 fee for those three months, so you effectively receive $70 – you already spent $30.

When comparing other credit cards, use the unadjusted values, as they are rarely factored into the calculations.

Best Value for Points

The best value for points is when you use them towards travel. The American Express rewards catalogue has many items in it, such as gadgets or appliances, but the value is severely reduced when you opt for stuff instead of flights.

Flights to neighbouring provinces give the best value, at nearly 2₵ per point. At the other end, flights to faraway destinations like Asia and Australia offer the second best value for points at around 1.3₵ per point. With ticket prices as high as they are (the average flight to Australia costs $1650!), this can save you a ton of money.

Short haul flights offer the best value for two reasons.

1.     The dollar value per point is highest

2.     Because it doesn’t take long to accumulate points, you can use them more often.

At this level of spending, you will always be able to get your money’s worth out of the card, even if you go for lower value rewards like a FitBit or grill.

You should avoid spending your points on anything other than travel, as their value is reduced.

American Express Gold Card

Wondering how different cards affect your rewards potential? Without changing monthly spending, here’s how the Gold Card stacks up to the Cobalt.

Destination

Average Price

Fixed Point Price

Months of spending needed

Real Value of Ticket After Annual Fee

Real Cashback

Montreal

$302.25

15000

5

$270.00

3.12%

Winnipeg

$392.00

20000

7

$250.00

2.17%

Poland

$1,109.50

60000

23

$750.00

2.17%

Slovenia

$1,062.50

60000

23

$750.00

2.17%

London

$994.25

60000

23

$750.00

2.17%

Sydney

$1,656.25

100000

38

$1,181.25

2.05%

Tokyo

$1,593.25

100000

38

$1,118.25

1.94%

Vancouver

$625.00

40000

15

$437.50

1.90%

Dubai

$1,353.00

100000

38

$878.00

1.52%

Cambodia

$1,346.00

100000

38

$871.00

1.51%

Chile

$1,282.75

100000

38

$807.75

1.40%

Hawaii

$635.50

50000

19

$398.00

1.38%

India

$1,222.25

100000

38

$747.25

1.30%

California

$460.75

40000

15

$273.25

1.18%

Paris

$692.25

60000

23

$404.75

1.17%

Florida

$442.00

40000

15

$254.50

1.10%

Aruba

$524.00

50000

19

$286.50

0.99%

Mexico

$443.50

50000

19

$206.00

0.71%

Colombia

$650.75

100000

38

$175.75

0.30%

 

Closing Thoughts

If you only use your American Express Cobalt Card to pay for food and drinks, and only use the points for short haul flights, your effective cashback is 10%. You get 5 points for every dollar spent, and every point is worth $0.02. Spending $500 on food means you get 2500 points, and those points have a cash value of $50.

However, if you do this, it will take longer to earn enough points for a flight, so your real cashback (after subtracting the annual fee) will be lower. By varying your spending, you’ll earn more points but they’ll be less effective.

None of these calculations take into account the generous sign up offer, which gives 30,000 points in your first year of owning the card if you make $500 worth of purchases a month. That’s enough for two tickets from Toronto to Montreal, giving that sign up bonus a value of $600!


Chris Chris 01/26/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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