Hi,

I have just applied for the AMEX Explorer and was considering paying the rent with it. The rent processor (DEFT) charges 3.3% per transaction. My rent is 2890/month which means $95 charged.

The Explorer gives 2 rewards point per $1 spent.

How do you assess if this is worth the extra charges?

If the surcharge is 3.3% and you get two points per dollar, then you’re paying 1.65 cents per point. It’s 1.5 points per velocity point (for example) so you’re paying 2.475 cents per velocity point, which is far more than I would be willing to pay for that.

Check out What's a point worth? Here are our latest valuations - Point Hacks which has more suggestions on how to value your points, but at a 3.3% surcharge for 2 of the lower value Explorer MR points it’s unlikely that it’s going to end up being value for money for you.

You’ll need to do some math to calculate how much the $95 expense equates to point values. All I can do is give you an example.

Your account will be charged $2985.00 so you will earn 5970 Amex Getaway points. If you were to transfer those points to say Velocity FF, they will convert to 4477 points. (5970/4*3) You have effectively paid $95 to gain 4477 FF points.

So if you were to use your points for an economy flight coast to coast and allow $400 as a standard fare or a reward seat at 18,000 points, then your points are worth about 2.2 cents each ($400 /18000). If you were to fly business class the same flight would cost $2000 or 36,000 points, your points are then worth 5.55 cents which Point Hacks considers very good point value.

Therefore if you were to use your points for the business flight, it is worth the $95 because your 4477 points equates to $246.26 (4477 * $0.055)

If you use them for economy fares then you will just break even because your points are worth $98.49 (4477 * $0.022)

If you use your points to buy a new toaster, you will be way behind!

Hope that helps.