American Express Starwood Card Review

I only got the American Express Platinum Card after really working through the economics and thinking about the decision for about a year.  Locking myself into paying $450 a year for a credit card seemed like a pretty big purchase.

My American Express Starwood Card story was a little different. I didn’t do much analysis at all. Though I didn’t dissect every little detail at the time, looking back, here’s why it was a good idea for me to sign up for the card and why it still makes sense for me to use the card as my everyday spend card two years later:

Low Annual Fee
The annual fee is waived for the first year and then $65 thereafter.  Unlike the Platinum Card fee, $65 is not much to stomach per year.  That won’t even buy you a dinner for two at Dos Caminos.

Point Accumulation
Generally, you receive one Starwood point per dollar spent on your American Express Starwood Card.  For every dollar that you spend at a Starwood property, you get two Starwood points from American Express.  As a Starwood Preferred Guest member (you’re automatically enrolled if you sign up for the credit card – it’s free), you’ll get an additional 2-3 points per dollar spent from Starwood, for a total of 4-5 points per dollar spent at Starwood properties!

Flexibility of Point Redemption
There are a variety of ways to use your Starwood points including buying flights directly or purchasing store gift cards.  However, the best use of your points is through redeeming them for hotel stays or transferring them for airline miles.

1.  Hotels:  For hotels, you can redeem points at any of the participating Starwood hotels for the following brands:  Sheraton, Four Points by Sheraton, The W, Aloft, The Luxury Collection, Le Meridien, Element, Westin, and St. Regis.  You can redeem Starwood points using 1) Only points to get free nights or 2) A combination of Cash & Points.

2.  Airlines:  For airline point transfers, you can transfer Starwood points to a number of airlines. The great thing about point transfers to airlines is for every 20,000 Starwood points transferred to an airline, Starwood will throw in an extra 5,000 points, so you end up with 25,000 points transferred (1.25 cents per point).

Point Value
The relative value of a Starwood point is the main reason I continue to use the card as my everyday spend card. You can realize a point value of at least 1.25 cents per point via airline transfers and anywhere between 2-7 cents per point (or more!) with hotel stays.  That sure beats the standard 1 cent per point value that I see with other credit cards (including the American Express Platinum Card).

1.  Airlines:  If you are redeeming for airline miles and transferring in increments of 20,000 points, you’re realizing a value of about 1.25 cents per point (assuming on average, airline miles are worth 1 cent per point).

2.  Hotels (points only):  I think a good proxy for the value of a Starwood point using points only for redemption is about 2 cents per point.  When I was looking at hotel options in San Francisco, I was seeing a value of 2-3 cents per point using only points.  You can boast up this point value even further if you are booking five consecutive nights at a hotel.  You’ll use points for four of the nights and Starwood will throw in the fifth night for free!

3.  Hotels (Cash & Points):  People have typically realized a much higher point value for the Cash & Points redemption option.  The problem is this feature is only available at certain hotels and limited times.  For example, of the seven downtown hotels available in San Francisco, only one of the hotels offered the Cash & Points option for my specified dates.  But when I did lock down the hotel with this Cash & Points option, I realized a value of over 5 cents per point!

The Economics
With the current sign-on promotion, you can receive 25,000 bonus Starwood points in the first six months of having the card: 10,000 after your first purchase and 15,000 points after spending $5,000 in six months (not a terribly high hurdle rate).

Assuming you were to sign up for the card today, spend $5,000 in six months to get the 25,000 bonus Starwood points, but then not use the card after that, what would your economics look like?

Using the same three year timeline I used for the Platinum Card analysis, you can see below that you actually benefit from having the American Express Starwood Card whether you use your points for hotel stays or transfers for airline miles.  Your economics in both situations would look even more attractive if you used the Starwood Card as your everyday spend card in years 2 and 3.

Scenario 1: Hotel Redemption (assuming value is 2 cents / point)

Scenario 2: Airline Redemption (assuming value is 1.25 cents / point)

If you like the economics above, you can apply for the card and cash in on the sign-on promotion here.  

Related Posts
The Top 23 Posts That You Missed
How to Bid for a Hotel on Priceline
Track Frequent Flyer Miles with Award Wallet
Starwood Preferred Guest Program
Getting to Philly from NYC
$200 Airline Fee Credit from American Express Platinum Card
Is the American Express Platinum Card Worth It?
What’s Your Burn Rate?

American Express, American Express Starwood Card, Starwood Preferred Guest Program

4. ALL POSTS, Money