American Express and McDonald’s announced that starting this week in NY and Chicago and nationwide in December you will be able to redeem American Express Membership Rewards Points for your next meal at McDonald’s. Reading that BusinessWeek article, you can tell both American Express and McDonald’s are excited for this new venture as American Express customers spend hundreds of millions of dollars annually at McDonald’s but you as the customer should not be.

Please Hit The Red Button

The ratio of points to food is 100 points = $1 so a $4 Big Mac (do they even cost that?) will require 400 points. This is the standard a penny per point ratio seen with many other credit cards. So why is this a bad deal? Here are a few reasons:

• American Express Membership Rewards Points are much more valuable when redeemed for travel by transferring them to hotels or airlines. You can easily get 2x-5x the value, probably more if you redeem miles for international first class travel.
• If you have a Business American Express Platinum Card, each point is worth at 1.2 cents since you can redeem Amex points through Amex Travel for any flight, hotel or car rental.
• Unless you have the new American Express Everyday card, you most likely pay an annual fee to hold an Amex card that earns transferable Membership Rewards points. If you plan on redeeming points for McDonald’s, you are essentially paying an annual fee ($175 for Gold, $450 for Platinum for example) for “free” McDonald’s. Think about that. Go get a no annual fee, 2% cash back card.
• You are better off paying for McDonald’s with a card that earns 2x on dining then the any Amex Card. Here’s why:
  • Let’s say you spent $400 on dining expenses over a few months on an American Express Card (say the Gold) and the Chase Sapphire Preferred. Not unreasonable. With the Amex card, you would have 400 points while the Chase card you would have 800 points (2x on dining).
  • If you chose to take advantage of this promotion, you could earn 1 Free Big Mac with Amex. But with the Chase card, you would earn 2 FREE Big Macs! How? Two Big Macs cost $8 so pay for that with your Chase card and then issue yourself a statement credit for $8 by using 800 points. 
• McDonald’s is creating a rise in childhood obesity and you shouldn’t support them by using your points for free meals there (and jeopardizing your own health at the same time anyway).
• Lastly, you shouldn’t eat at McDonald’s that often so when you go, you can “treat” yourself and pay $8 for your meal.

Ok, some of those points were a little tongue in cheek but seriously, don’t use points to pay for food at McDonald’s.