Reader Question – Denis Brault

I receive a bunch of emails and comments asking for clarifications or advice on how to best take advantage of the points people have.  I have normally answered the questions in the comments section of the posts but I think in this particular case, the response might help more people so I thought I would make it a post.

PointsNerd reader Denis Brault posted the following question on my How I Hack – Explaining Arbitrage and How to Take Advantage of the Marriott/SPG Merger:

Getting Started

I don’t think that Denis’ situation is a unique one in that I assume many people have less than 100,000 points in a bunch of different programs and while this provides you with some flexibility, you often find yourself in no man’s land.  Denis for example, has a decent collection of points in each program but none of his accumulations will really help with desire to get to Europe, stay in a hotel, take a cruise and return home … well not without some creative thought.

This is not an attempt to disparage Denis or anyone in his situation in any way but what you really should do before you jump into the points game is to think about what your end goal is.

Now I know that this may not be the way that most people think about rewards but it certainly helps long term.

If you don’t have your exact redemption in mind or even know what part of the world you want to go to, that’s okay.  I understand that some people want to make sure they get started with collecting points right away and then figure out the trip, which can be a great strategy.  The more flexibility you have, the better off you’ll be and when I say flexibility, I mean leaving on a Tuesday instead of a Friday.  Points flexibility is also important, which is why I highly recommend collecting American Express Membership Reward Points and SPG Points.

AMEX Membership Rewards can be collected through:

• American Express Gold Personal – 25,000 MR sign up bonus after $1,500 spend in the first 3 months with First Year Free
• American Express Gold Business – 40,000 MR sign up bonus after $5,000 spend in the first 3 months with First Year Free
• American Express Platinum Personal – 60,000 MR sign up bonus after $1,000 spend in the first 3 months with a $699 Annual Fee (read my review to see how this gets reduced to $299)
• American Express Platinum Business – 75,000 MR sign up bonus after $5,000 spend in the first 3 months with a $399 Annual Fee.

SPG Points can be collected through:

• American Express SPG Personal – 20,000 SPG points after $500 spend in the first 3 months with a $120 Annual Fee
• American Express SPG Business – 20,000 SPG points after $1,000 spend in the first 3 months with a $150 Annual Fee.

The benefit of these points is you can transfer them to different partners rather be locked in to one particular program.  If you are interested in more information about Membership Rewards or SPG, please read my reviews of the cards above.

Denis’ Situation

Now that we’ve covered of what the ideal situation is, let’s look at how we can help out Denis in his current situation with the hodgepodge of points he currently has.

• 67,000 Aeroplan
• 40,000 Membership Rewards
• 55,000 Marriott Rewards
• 21,000 SPG Points

Because Denis commented on my How I Hack – Explaining Arbitrage and How to Take Advantage of the Marriott/SPG Merger post, I’ll assume he wants to take advantage of the 5 Nights and Airline Points Package.

If you recall, the number of Marriott points required to qualify for this is 235,000.

Denis currently has 21,000 SPG which transfer to Marriott on a 1:3 ratio so essentially he has 63,000 Marriott Points.  Add those to the existing 55,000 Marriott Points he has and he’s at 118,000.  So we’re just over halfway there.  Denis needs an additional 117,000 Marriott points.

Option 1

Now Denis does have 40,000 Membership Reward Points, which can convert to SPG points at a 2:1 basis through American Express so he could do the transfer and end up with 20,000 SPG which would then translate into 60,000 Marriott Points, which leaves Denis just 57,000 Marriott points shy of his goal.

Now while the transfer from Membership Rewards (MR) to SPG to Marriott is a possibility, I would reserve this option as a last resort.

Option 2

SPG currently has a promotion where you can purchase points for 25-50% off depending on .. well … luck.  You need to log in to your SPG account to see what promotion you qualify for.

You can do so at https://buy.points.com/marketing/spg/landing_page/#/en-US 

Denis is 117,000 Marriott points short and because the transfer ratio from SPG to Marriott is 1:3, he only needs 39,000 SPG.

Unfortunately, even at 50% off, it can get pretty pricey.

30,000 SPG points = $1,050 (regular price)
9,000 SPG points = $315 (regular price)

Total Price for 39,000 SPG points is $1,365 USD.  If you got the 50% off promotion, you would still be paying $682.50 USD (~$920 CAD).

For me, that’s just too expensive.  If we look at the CPM cost, we are coming in at 2.4¢/point.  Much more than my threshold of 1¢/point.

Option 3

Based on the fact that Denis currently has 21,000 SPG points, I will play detective and suggest that he signed up for the AMEX SPG Business Card and received the 20,000 bonus as well an additional 1,000 points he would have received for his required minimum spend of $1,000.

Let’s assume that Denis still qualifies for the AMEX SPG Personal.  If that is the case, he should apply for the SPG Personal, meet his minimum spend and collect an additional 20,000 SPG points.

If you recall, Denis needs an additional 117,000 Marriott Points.

By applying for the SPG Personal Card, Denis would receive an additional 60,000 Marriott Points (20,000 SPG –> 60,000 Marriott) and leave him just 57,000 Marriott Points short.

At this point, Denis could take his Membership Reward points and transfer them to SPG (as detailed in Option 1) to make up the difference.

Option 4

Forget the Marriott Arbitrage opportunity and focus on collecting more Membership Reward Points through AMEX.

Dennis currently has 67,000 Aeroplan and 40,000 Membership Rewards.  This mean that with a 1:1 Instantaneous Transfer for MR to Aeroplan, Denis has 107,000 Aeroplan points.  If he wants to fly 2 people in Economy on a round trip to Europe 1, he’s only 13,000 points shy (60,000 round trip per person), which can easily be made up through spend or credit card bonus sign ups.

I’ve covered off how to book you trip to Europe in a real world example for Lisa, and because Lisa is based in Montreal as well, it’s a perfect example.  Lisa even sent in an email detailing her success!

Assuming Denis can get that 13,000 in Aeroplan, either through Aeroplan directly or through Membership Rewards, he then has all his Marriott and SPG Points for hotel stays.

While it may be tough, finding hotels in lower categories to stay at, it is possible.

In fact, Marriott makes it pretty easy to find lower tiered hotels.  Just use the tool at http://www.marriott.com/marriott-rewards/use.mi

What About the Cruise?

Ya, the cruise is a hard thing.  I haven’t really looked hard into it but as far as I know, there isn’t a good mechanism to cash in points for cruises.  If I’m wrong, please let me know in the comments below.  The only thing I could suggest for the cruise is to sign up for the Capital One Aspire Card as you can use the points from the card to write off all travel expenses.  For more about how this card works, read my review of the card.  I personally carry it with me in my wallet and it’s one of my default cards when AMEX isn’t accepted.

As the Capital One Aspire comes with $400 in travel credits, it will help to offset the cost of a cruise.

Conclusion

As you might well imagine, there are a bunch of different ways you can get to where you want to go using points.  Understanding your options gives you an idea of how to best maximize your points and while I may not have come up with the solution that works for Denis, my hope is that by going through the options above, it allows for him (and you) to start thinking differently about how to use your points.