American Express OPEN Savings is Great – But the New Bonus Point Option is Not

American Express has added the option of earning Membership Rewards points instead of cash back to its OPEN small business credit cards.

Cards like the Business Gold Rewards Card® from American Express OPEN, the Starwood Preferred Guest® Business Credit Card from American Express OPEN, and The Business Platinum Card® from American Express OPEN come with ‘OPEN’ savings that give you cash back automatically when you places charges on the card with participating merchants.

There’s Hyatt plus five Marriott brands, Fedex, HP, OfficeMax, 1-800-Flowers, Dun&Bradstreet, and others.

I’ve frequently argued that domestic Hyatt stays are better paid for with an American Express business card than with the Hyatt Visa (3 Hyatt points per dollar) or Chase Sapphire Preferred (2.14 Chase Ultimate Rewards points per dollar).

Paying with the Starwood Preferred Guest® Business Credit Card from American Express OPEN earns 1 Starpoint and 5% cash back which I value far more than either the Hyatt or Chase points.

Now, you have the choice whether you want the cash back or bonus points instead.

But you should always take the cash.

The best deal offered on points is going to be effectively buying points at 2.5 cents apiece. With Hyatt, for instance, you can choose to earn 5% cash back or earn 2 bonus Membership Rewards points.

Some deals are less good — Spending up to $250 with Fedex Office earns 3% back or 1 bonus point, meaning you’re buying the point at 3 cents apiece.

I love my Membership Rewards points. I’m a huge fan of the flexibility, the speed with which they transfer to most partners, and especially that they transfer to Singapore Airlines (for their amazing first class award availability, not the laugh-worthy Virgin America premium cabin redemptions).

But it’s hard to imagine why I would buy them at 2.5 cents a point.

• If you need more points than you have they’ll lend you points (it used to be done online, now you can still call, and Platinum cardholders can borrow 60,000 points even).
  
• You have a year to earn the points back and if you don’t you’ll pay for them — at 2.5 cents apiece.
  
• American Express will outright sell you points if you are a personal cardholder and have maxed out your borrowing allowance… for 2.5 cents apiece.

And I would only value them that highly when I needed a specific number of points at the margin to redeem for a specific award.

At the minimum, with OPEN savings, I would take the cash and then if I really needed the points later I would buy the points with the cash – and come out no worse off in the end. And assuming I didn’t need to buy the points, I would be better off…

(I landed Friday after a long haul flight and misplaced the blog link or Milepoint post where I fist read about this change, so apologies for lack of hat tip. Note also that links to the American Express cards in this post do provide me with a referral credit if you use them for your card approval, which I greatly appreciate.)