Here’s the Best Way to Redeem Amex Membership Reward Points

American Express cards are well-known among credit card newbies and reward card aficionados alike for rewarding cardmembers with lucrative points, luxury perks and unique card designs such as the iconic rose gold American Express® Gold Card.

But perhaps the most appealing reason to love Amex cards are the versatile Membership Rewards® points that cardmembers earn through everyday purchases like dining out, groceries and business expenses — then redeem for first-class flights, luxury hotels, cash back and more.

With some participating brokerage accounts, you can even use your Membership Rewards points to invest (more on that below), and transferring them to select airline partners can give you an even bigger bang for your buck.

All in all, Membership Rewards points have stood the test of time since they first came on the scene in 1991, but it’s important to know the best ways to redeem points in order to maximize their potential value.

Below, Select breaks down our favorite ways to redeem Membership Rewards points so you can squeeze the most value from your most-used Amex cards.

The hands-down best way to spend your Amex points is to redeem them with a travel partner instead of booking through Amex Travel. Using the Amex Travel portal only gives a value of one cent per Membership Rewards point for flights, whereas transfers to airline partners, on the other hand, can yield up 15 cents per point if you play your cards right.

Amex partners with 19 airlines including AeroMexico, ANA, British Airways, Delta, JetBlue and Virgin Atlantic. Most Membership Rewards transfers process instantly, while others can take up to 48 hours.

Use the airline points to pay for flights, and you’ll see how the exchange rate works in your favor.

Hone in a little more, and you’ll soon find shrewd ways to stretch your points further. Like this little-known hack we love: Transfer your Membership Rewards points to Virgin Atlantic Flying Club, then book a business or first class flight on All Nippon Airways (ANA). It’s a genius trick that can score you an upgraded flight from west coast cities like Los Angeles and San Francisco to Japan for just 90,000 points round-trip (business class) or 110,000 points round-trip (first class). Flights from the East Coast cost just a little more.

A round-trip first class flight from the U.S. to Japan can easily cost $15,000. If you booked this through the Amex travel portal you’d have to cough up 1.5 million points. But by transferring your Amex points to Virgin Atlantic you’ll be paying just a small fraction of an otherwise gargantuan cost.

To help you gauge how long it’d take to earn enough miles, let’s look at how many points a popular Amex card bonus earns.

The American Express® Gold Card earns qualifying new cardmembers 60,000 Membership Rewards® points after spending $4,000 on eligible purchases within the first six months from account opening. That’s two-thirds of the way to a round-trip business class ticket to Japan using the above redemption strategy, and the card continues earning on purchases at the following rates:

• 4X Membership Rewards® points on restaurants worldwide (including takeout and delivery, plus, Uber Eats purchases) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X)
• 3X points on flights booked directly with airlines or on amextravel.com
• 1X points on all other purchases

Just as airline partner transfers result in amazing deals, so do transfers with Amex hotel partners.

Amex partners with three hotel chains: Hilton, Marriott and Choice. Using the same strategy above, you can transfer Membership Rewards points to the hotel program at an often higher value.

Hilton offers the best transfer ratio value, at 2 Hilton points per 1 Membership Rewards point. Marriott and Choice hotels offer a 1-to-1 ratio.

Using this ratio, here’s how many hotel points you could get by transferring 75,000 Membership Rewards points (equal to the welcome bonus you can get with the The Platinum Card® from American Express after spending $5,000 within six months of account opening):

• Hilton: 150,000 points
• Marriott: 75,000 points
• Choice: 75,000 points

You’ll typically yield more value by transferring your points to airline partners and booking flights, but using points for hotel stays can be smart too. You’ll do well when redeeming points for luxury hotels or when demand for hotels is high which translates into high cash prices.

You can book the Conrad Maldives for 95,000 Hilton points a night, meaning the Amex Platinum welcome bonus would almost be enough to reward cardmembers with a two-night stay. Rooms at the Conrad Maldives can go for more than $1,000 a night.

If you have an American Express Platinum Card® for Schwab, you can transfer your points to a qualifying brokerage account at a rate of 1.25 cents per point. This is an incredible deal, considering the normal cash-out rate to turn Membership Rewards points into a statement credit is .6 cents per point.

But unlike regular cash back, of course, card members will continue to earn on that cash while investing their Membership Rewards® points in the stock market.

New cardmembers can earn 60,000 Membership Rewards® points after spending $5,000 in purchases in their first three months, which equates to a $750 deposit into your eligible Schwab account. 

In addition to the Amex welcome bonus, Charles Schwab account holders can receive additional cash boosts when their holdings reach the a certain thresholds at the time of account approval (and annually thereafter):

• $100 card statement credit if your qualifying Schwab holdings are equal to or greater than $250,000
• $200 card statement credit if your qualifying Schwab holdings are equal to or greater than $1,000,000

The Platinum card also comes with perks like airport lounge access, hotel elite status, up to $200 in Uber credit and $200 in airline incidental credits.

If you’re ready to start earning top-notch rewards and VIP perks, check out our favorite Amex cards that earn Membership Rewards points (as opposed to Amex cash back cards):

To determine which credit cards offer the best value for various categories, CNBC Select analyzed Amex credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

CNBC Select teamed up with location intelligence firm Esri. The company’s data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri’s data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

While the five-year estimates we’ve included are derived from a budget similar to the average American’s spending, you may earn a higher or lower return depending on your shopping habits.

For rates and fees of the Blue Cash Preferred® Card from American Express, click here.

For rates and fees of the Blue Cash Everyday® Card from American Express, click here.

For rates and fees of the American Express® Gold Card, click here.

For rates and fees of the The Platinum Card® from American Express, click here.

For rates and fees of the Blue Business® Plus Credit Card from American Express, click here.