American Express Travel Rewards or American Airlines Travel Rewards?


In most cases, credit card rewards points should mostly be used for travel benefits and not for merchandise purchases.  Typically you burn more reward dollars on merchandise than the merchandise is worth.  I remember looking up the cost of an Ipod years ago.  The Ipod cost $185 and on the rewards site you would have to spend the equivalent of $300 in reward dollars.  That is not a good use of your reward dollars.

So if you are choosing a travel rewards card, what makes more sense?  A general reward travel program or an airlines specific program?

For the purposes of debate, we will compare the American Express Rewards program with the Citi American Airlines Visa card.

The Am Ex travel program allows you to use reward points for any travel related expenses.  Basically, it is a 1% cash back program where you get 1% back of your spending in travel dollars.  For example, if you spent $50,000 on an AM EX card over time, you would have $50,000 points or $500 to apply towards travel expenses.  The site has a travel site where you can book flights, hotel rooms, and cars and pay for all or part of the cost with reward dollars.

For example, let’s say you have $500 in rewards points and you pay 2 $300 tickets.  You apply the $500 towards the cost and it only costs you $100.

With the American Airlines card you get a ticket anywhere in the US for 25,000 points.  It goes a long way to take out the uncertainty of cost.

So, which one is better? I like the idea of having a ticket on American Airlines ready to go when I need it.  That is appealing.  However, the American Express Rewards program offers a better travel benefit.

First, with the American Airlines rewards you have to book way far in advance.   Airlines don’t have a large number of reward seats on their planes.  So, it comes down to availability.  If there is a more popular flight, it can cost you more than the 25,000 reward point tickets.   Second, cost of the ticket.  If a ticket only costs $220, do I want to pay cash or burn a reward ticket? You would probably rather pay for it and save the reward ticket for more expensive ticket.  In addition, they charge a fee for booking the rewards ticket.

American Express offers the consumer more flexibility in travel choice with a choice of airlines (except Southwest) down to rental cars and hotels.  Plus, you don’t hesitate using your points on that $200 ticket. A word of caution on hotels and rental cars.  Before using reward dollars for those expenses, double check to make sure you are getting the best deal possible.  You are not always getting the best deal on the travel site.

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