The hidden cost of point transfers (Should you take advantage of that transfer bonus?)


Barely halfway into 2022, we have already seen a dozen point transfer bonuses offered by transferable points programs (you can find the current point transfer bonuses as well as expired historical offerings on our Current Point Transfer Bonuses page). Any time there is a big point transfer bonus (which has felt like “more often than not” this year), we inevitably get questions about whether readers should “take advantage of” bonus X or Y while they have the opportunity. I’ve even gotten questions from friends who aren’t much into miles and points about whether a bonus is a good deal or whether they should transfer now to “get more points”. That led Greg and then me to think about the cost of speculatively transferring points. In short, a transfer bonus simply isn’t a good deal to me unless I plan to use the points right away. If my plan is “someday”, I can generate points more cheaply over time.

The value of a Membership Rewards point and cost of redemptions

For the purposes of this post, I’ll consider Amex Membership Rewards point transfer bonuses, though similar calculations could be done for other currencies.

Our Reasonable Redemption Value for Membership Rewards points is 1.55c per point. In other words, we think it is reasonable to expect to get that much value or more from each point (typically by transferring to airline programs) without a lot of effort to cherry-pick best uses.

However, points can’t be easily traded for cash at that rate, so some of us set a different floor for the cash value of a Membership Rewards point. Those who have the Schwab Platinum card can redeem points for deposits in a Schwab brokerage account at a value of 1.1c per point. Therefore, although points can be worth far more when leveraged in the right situation, 1.1c is the floor value I often use for Amex points.

The ability to trade points for cash at a rate of 1.1c per point means that I also view redemptions through in terms of what they cost me at 1.1c per point. That’s because if I redeem 100,000 points for an award ticket, I knew that I could have alternatively had $1,100 in my Schwab account, which puts the cost of redemption in clear focus. That 100K award ticket truly cost me $1,100. While I love the “joy of free” as much as the next person when I make a great redemption, the cash money I am trading away hurts my heart more and more when I consider the purchasing power that the points represent. I’ve spent more time considering the cost of my redemptions over the past few years.

The cost of points through point transfer bonuses

Thinking about redemptions in terms of cost at a value of 1.1c per point can be extended to transfer bonuses. Since I could otherwise redeem points at a value of 1.1c per point, a point transferred to an airline or hotel program is essentially 1.1c spent. While you aren’t “buying” miles with cash from your bank account, you may as well be each time you transfer a point that could have been 1.1 pennies and make it an airline mile or two. The Schwab cash redemption helps put it into clear perspective that points transfers are point purchases even if indirectly.

So how much do point transfer bonuses from Amex cost? That of course varies by the amount of the transfer bonus:

Transfer bonus of 25%

  • 1 Membership Rewards point = 1.25 miles
  • If 1 point = 1.1c, then you’re paying 0.88c per mile (1.1 / 1.25 = 0.88)

Transfer bonus of 30%

  • 1 Membership Rewards point = 1.3 mile
  • If 1 point = 1.1c, then you’re paying 0.85c per mile (1.1 / 1.3 = 0.85c)

Transfer bonus of 40%

  • 1 Membership Rewards point = 1.4 mile
  • If 1 point = 1.1c, then you’re paying 0.79c per mile (1.1 / 1.4 = 0.79c)

Hilton 30% bonus

  • 1 Membership Rewards point = 2.6 Hilton points
  • If 1 point = 1.1c, then you’re paying 0.42c per Hilton point (1.1 / 2.6 = 0.42c)

Hilton 40% bonus

  • 1 point = 2.8 Hilton points
  • If 1 point = 1.1c, then you’re paying 0.39c per Hilton point (or 0.42c at a 30% xfer bonus)

The above rates can certainly be entirely reasonable rates at which to purchase airline miles when you have a specific near-term use in mind.

However, would you speculatively buy miles at the rates above? While you can certainly use the miles to greater value than the cash cost in many cases, I would generally hesitate to tie up actual cash dollars in airline miles unless getting a really fantastically cheap rate on the miles.

While the rates above are certainly pretty good, I’m not a speculative buyer of airline miles at those rates for a couple of reason. First, by keeping my points flexible (transferable), I have a lot more freedom to cherry pick the best redemption value when I’m actually ready to book something (I don’t want to give up that power when I’m not ready to book something). Second, I consider my ability to generate airline-specific miles and I hesitate to speculatively buy them at the above rates when I could take my time speculatively generating them for less cost.

What I mean to say there is that if I have an imminent booking to make and a transfer bonus lines up with that booking, I’m happy to stretch the value of my points as far as possible. However, if I don’t have an imminent booking to make, then I have time to generate the miles I “might” need “someday” more slowly and cheaply than those rates above.

Cost of manufacturing points

Kroger Gift Card Rack

While Amex specifically has language calling out and frowning upon manufactured spending techniques and has clawed back welcome bonus or other short-term spending bonus points earned through those techniques, I nonetheless find manufactured spending techniques in general to provide a good baseline comparison point for the cost of generating miles and points. Many Amex transfer partners also transfer with other points programs or there may be airline-specific cards available that enable one to generate miles even if at only 1 mile per dollar spent.

It therefore makes sense to look at a couple of quick comparison points regarding manufactured spending and the cost of generating miles.

For example, let’s imagine that you live near a Simon Mall (n.b. Keep in mind that Amex cards will earn zero points for purchases of gift cards at Simon Malls). What is your cost per mile if you used a card that earned just 1 airline-specific mile per dollar spent (I am intentionally choosing a very low return on unbonused spend)? A Simon Visa Gift Card can be loaded with up to $1,000 for a fee of $3.95 (or maybe less when on sale online). Let’s imagine you have a liquidation method available that would cost another $1 (YMMV for sure as some will have no options and others will have cheaper options). If you’re able to MS, your cost for 1,004 airline miles (earnings for your $1,003.95 purchase of the Visa gift card + activation fee) is $4.95. THat comes out to a cost of just under 0.5c per mile.

If you don’t live near a Simon Mall and a local grocery store is your best option, you’ll be looking at buying a $500 card with a $5.95 activation fee. Assuming the same $1 liquidation cost, you’re at $6.95 for 506 points (at 1x) or a relatively high cost of 1.37c per mile.

Assuming you have a credit card that earns 3x at a grocery store, the cost becomes much more reasonable. The same $6.95 in cost to generate 1,518 miles ($506 x 3) is 0.46c per mile.

Of course, if you catch those fee-free Visa gift card and Mastercard gift card sales at office supply stores or 4x fuel point promos at the grocery store, your cost per mile can be significantly lower than the numbers above.

Those are hardly the only options for manufactured spending. See our guide to Best options for buying Visa and Mastercard gift cards or our Manufactured Spending Complete Guide for more detail. My point is that if I’m not in a hurry to have points that I need for a specific near-term use, I am more interested in generating points at a lower cost than what I’m effectively paying for points during a point transfer bonus.

Bottom line

The manufactured spending numbers above represent what it would cost me to slowly generate my pile of “someday” miles. I am much more likely to continuously chip away at building a stash at those rates than I am to speculatively transfer now just because “25% more points is a good deal”. It isn’t a deal unless you have a near-term plan to use the points.

Of course, the above calculations completely ignore the time investment in manufactured spending and the various risks associated that may make it a completely unappealing opportunity for many readers, so those may not be your benchmark comparison points. Still, I think the fact that you have time to slowly build up your “maybe I’ll use these someday” points via category bonuses and new card welcome bonuses is more compelling than speculatively buying points without a specific near-term use in mind.

The bottom line for me is that a point transfer bonus can be huge when I know I’ll use the miles to great value right away. Otherwise, I’m better off focusing on slowly building my stash of points so I can strike when the iron is hot when my “someday” arrives.

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[…] The Hidden Cost Of Point Redemptions:  Valuing points is certainly important to determine if a points redemption is worth your while.  Another way to look at it is how much it is “costing” you to “purchase” miles when transferring your points to hotel or airline loyalty programs. […]


As I think of it, it’s kind of a bet. Will the miles (plus 30-40%) have more value when used, or will the points when you want them? I’ve definitely benefited from speculative transfers, ie i won the bet, in the past… but it’s a while ago. Bonus transfers to UA, AA and BA all worked out for me. But it certainly could have gone south, too.


There is a reason to take a bonus – when you need some movement in the airline/hotel account to keep the miles/points alive, a good example is Avianca Lifemiles which expire in 12months if no movement.


12 months !!!!!


… was just saving space

Biggie F

This is a great article, Nick, and has helped convince me that I should go ahead and transfer to AF in the next few days. It’s not that I disagree with your valuations – it’s because your valuations have helped me conclude that it is worth it to me.

Relevant facts in my case:

  • True, Covid could shut things down again, but for the most part we’re reasonably active AF-takers, and along the lines outlined by WR below
  • I’ve given up on the idea that miles and points is getting me anything for free. I see it only as a way to get the price on some things I desire (better plane seats, better hotel rooms) at a price I am still willing to pay.
  • For a lie-flat to and from Europe, I will (and do, when they occasionally pop up) pay $2,000 (and probably $2,300, if you pushed me) [Logic: excruciating seats in steerage are getting harder to find at even $1000 before add-ons, and I just can’t see ever paying the standard price north of $4k for business seats — makes $2k about right.]
  • For that reason, even at 150,000 AF Flying Blue miles (the 115,000 point RTs are getting harder to find if your schedule is not totally flexible) and maybe $650 in fees (grrr), that my 120,000 MR points coupled with the current 25% transfer bonus is still allowing me to have access to these RTs at somewhat under $2,000

That works for me. I suppose some day I will learn how to unload GCs by driving around to grocery stores, but if I can put that off a little longer, so much the better (for me).


I just got it the First time and some have gotten it 5x.U need normal to get back in so u could be there for weeks and ins.won’t pay ???


I think you also have to account for the cost of keeping a card active that permits transfers… for Amex it’s $0 with BB+, but that’s not true with Chase and especially not with Citi. With Citi you have to not only pay the annual fee, but you’re also making it hard to earn the bonus again. If you don’t get a retention offer it’s a definite cost. Granted, you can operate in two player mode but it’s still a cost.

And the per-point cost of paying $99 depends on the amount of points you have in your account. So if I’ve already transferred points and only have 30k typ, for instance, that af adds .3 cpp to the cost of redeeming those points. In that case, looking ahead to whether you’ll want to pay the AF, it’s rational to decide to transfer while the rate is a bit better.

TBC, I would only travel to a reliable partner, where I have confidence that I’ll be able to redeem in the relatively near future. For me those are: AA, UA, probably BA, lifemiles, Turkish, maybe JetBlue. And obviously I wouldn’t want to transfer while I’m rolling in avíos, for instance, unless I see an impending use.


I remember getting my nephew into the cc rewards game. He was signing up for all the big bonuses years ago then squandered the points on low redemption offerings.
I tried to explain the value of miles/points to him but he only responded: “how can I do better than free travel?” To which I responded “by getting more free.”
I’m not a guy that needs to maximize every redemption, but I do place a floor on redemption value when considering points vs cash transactions.


This is only if you have, and keep, the Schwab plat. Of course it makes sense to get the Schwab at some point, but to keep it without a major retention offer is obviously a steep price to pay just to cash out points. And if you don’t have a cash out option, then the above valuations are immaterial.

Personally I take advantage of transfer bonuses speculatively, but only to a level such that I have enough points on hand for one of several targeted redemptions. My travel style requires me to take advantage of airlines opening up award space close in, so I need points on hand in a variety of programs to grab availability quickly when I need it. Of course there is risk of expiration, but I haven’t run into that yet.

Last edited 5 months ago by WR2

Amen. I also do speculative transfers. I don’t adhere to the age old advice of almost every blogger not to do it. The bonus transfers are rarely available when you actually use the miles and even if the points devalue, it’s very unlikely to be a bigger devaluation than the bonus.
Too many bloggers giving bad advice like no speculative transfers and “earn and burn”. I say earn all the free miles you can before the avenue goes away. Crazy to follow their creed. Take advantage while you can because the game is getting tougher every year.

Chris from GoBucketYourself

I don’t think the advice is bad, it just might be bad for you. My assumption is they’ve heard or experienced dozens of situations where the speculative points died a lonely death because of a speculative transfer.


The folks here write frequently (and quite recently) about when they, themselves, don’t follow the general rules. That doesn’t make those rules bad guides, especially for the inexperienced.

The biggest mistake that people make is to assume that the particular redemption will be available when they want it. So people say “I’ll transfer to Virgin America now, so I can use the points when I go to Japan in November 2023”. But, of course, the chances of getting that redemption when they want it is pretty slim. More sophisticated mile collectors with more frequent and open travel may know that they have a use case to “burn” the points.


I can’t argue your point, but I will say bloggers rarely if ever make the case you do. The same boring mantra “do not transfer unless you have a specific redemption in mind” is touted by nearly every blogger without qualification. It’s just wrong. For those of us doing this seriously (as WR2 obviously is), the real game played well is in diversification of points as he or she states. Take advantage of the bonuses when available if they are to a valued program.
Experienced gamers know the valued programs.
It’s like all bloggers cater only to the inexperienced. Are they the bigger audience? I don’t know.


I guess the counter-point is that of course bloggers tend to cater to those that are more inexperienced. If you know the valuable programs and can take advantage of transfer bonuses you’re not as likely to be reading a blog if transfer bonuses are worthwhile 😉


This is really useful, and especially relevant for Amex’s partnerships with Hilton and Marriott Bonvoy. Hilton often sells points at 0.5/each, which equals the “base” MR transfer rate (1 MR = 2 HP). Marriott sells for as low as 0.8/each, which implies that even with a transfer bonus, you would want to get 0.9-1 CPP or better to justify doing so, while for Hilton, you would want to get 0.6 CPP or better.

While doable in some cases, it’s not reliable enough to justify a speculative transfer to either program merely because it’s available.


Great analysis Nick! I always enjoy reading your thoughts on these situations. I’m waiting for your new book to come out in paperback soon. “How AMEX Paid for my Minivan”.
By the way, if you press the $ key and hold it down, a menu of options will pop up and you can select ¢ instead of using c.
Jus’ sayin.


Why do we value membership reward points at 2 cents each when none of their transfer partners are valued at that. Do you think they should be valued at no more than the highest value of one of their transfer partners?


One word… flexibility. You can get 20+ cents per point if you transfer to Virgin Atlantic with a transfer bonus and book ANA F. Doesn’t mean points are worth that because people wouldn’t pay $25k for a round trip ticket in F, but I think people would pay $1020 (Amex cash value) for that ticket easily. I mean… people would probably pay $2040 for that ticket easily (I know award availability is tough to find sometimes, but if you have 18 programs with some having transfer bonuses, you can get outsized value compared to the value of 1 program.


Who is this “we”? I value them a little over the 1.1 cpp cash out rate, like maybe 1.5 cpp, due to flexibility, but 2cpp is tpg level delusion.


Amen again to you WR2. You obviously know this game better than most.


Nice perspectives. Thank you Nick. I had good experience transferring Amex points to ANA for direct flights to Asia. The fuel surcharge is a headache but in my case the value seems to be over 4c/p even just for econmomy seats on ANA metal. Out of this topic I am still debating if I should take advantage of current 40% bonus offer transferring all my thankyou points to Qatar avios (with Citi reward+) then downgrade my Premier to custom cash to save $95 AF. No near term use and Avios could be a bit tricky to use with the surcharges. But 40% bonus still seems to be sort of attractive.