But first:

SAVINGS BONDS WILL NOW HAVE TO BE HELD A YEAR

A small change to be aware of: The minimum holding period for Series EE and Series I bonds has been extended from 6 months to 12 months beginning with bonds issued next month. But you can still buy them on-line with your credit card and get your frequent flier miles.

And now:

DO YOU HAVE AN AMERICAN EXPRESS CARD?

If you do, you should be earning ‘Membership Rewards’ points for every dollar you charge. But if you pay late, you forfeit the points for that month. What I didn’t know was how easy it is to get them reinstated.

I went to www.americanexpress.com and found my account balance. (If you haven’t signed up for on-line access, it’s easy.) I then clicked Membership Rewards and saw that I have truly a gazillion points – which I knew – but also that I had 33,980 forfeited points that I could reinstate online. As each point is worth a ‘mile,’ on several airline programs, I clicked to see how I could reinstate them and – the system being temporarily down – was given a toll-free phone number to call. I quickly reached a cheerful rep who explained, that (a) I could reinstate even more miles – this 33,980 was just the most recent few forfeits, but she could go back to 1998 – and that (b) each reinstated month would cost me $15.

Well, that’s pretty decent of American Express, if you ask me. I had forfeited the points by being a little late with some of my payments – my fault, not theirs. I travel a lot and get a lot of mail and, well, these things happen. Indeed, these things had apparently happened seven times since 1998, so we went through each month, and I choose to pay the $15 for four of the seven, reinstating 48,000 points/miles for $60. Essentially, a free first class ticket for $60! The other three months’ balances were too low to waste the $15.

Miles are worth a penny or two each to most people, so paying $15 may not make sense if you’re reinstating just 500 or 1000 of them – especially if you have a gazillion already and may not actually use them for a long time.

Frequent flier miles’ value depends on how you use them. At a minimum, they are worth half a cent each – American Express will let you cash in points in 20,000-point increments for $100 each. (So on that basis I paid $60 for what could have been $200 in cash, with 8,000 Membership Rewards points left over.)

The value of the stuff you can redeem airline miles for in the typical ‘rewards’ catalog – golf clubs, wheels of cheese – generally works out to a penny a mile. (The whole point of those catalogs is to get you to trade your miles for a penny instead of the greater value they can generally bring from exchanging them for air travel or hotel rooms.) So on that basis, I paid $60 for $480 worth of stuff.

The wholesale value of miles within the travel industry is about 1.3 cents. (So on that basis, I was paying $60 to get $625 or so in value.)

The general rule of thumb I use is 2 cents, because I can often find a way to save $500 by ‘buying’ a coach ticket for 25,000 miles. So my $60 bought me $960 worth of travel.

Those who only travel with Saturday stay-overs or on routes served by Southwest Airlines or Jet Blue, or who can accept the uncertainties of booking through Priceline.com, and who thus may never pay more than $200 for an airline ticket or $39 for a hotel room, may not be able to save so much by using miles. To them, Amex points may be worth barely a penny, if that.

Those who would normally pay $7,000 for a business-class roundtrip to Paris but can get it for 100,000 points instead, say, are getting 7 cents of value from each point. I would sooner swim to Paris than pay $7,000, but if I were that kind of traveler, my $60 would have bought me $3,360 in value.

Note that American Express and Continental Airlines are currently running a promotion that gives a 25% bonus for transferring 10,000 or more Amex points into your Continental mileage account. One worries, of course, that Continental (and other airlines) may not be around forever and that any successor airline might not honor the points. So I wouldn’t do this just to do it. But if were about to book a trip with miles someplace Continental flies, and needed more Continental miles to do it, my 48,000 reinstated Amex miles would transfer over as 60,000 Continental miles. If those were valued at 7 cents each, my $60 would have bought me $4,200 in value.

 

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