The value of miles and points differs and is based on a variety of factors – for example, which points you are using, what airline you’re flying on, and what cabin you are flying in. In general, every type of mile and point in our frequent flyer world has been assigned a “value” and how much it is worth – while there are an infinite number of ways to redeem your points, you will often find the best value when you redeem for flights by transferring to airline partners.
find the value of your points before redeeming
The Value of Miles and Points
The value of a mile or point depends on what program it belongs to. For example, American Express Membership Rewards points are generally worth 2 cents each, so 10,000 points is worth $200. This doesn’t mean that you can just go directly to American Express and cash out your points at this value. Rather, this value is assigned by us – those who know how to use their points towards maximum value.
In fact, if you want to apply your AMEX points as a statement credit towards charges you’ve made on your credit card, you might even get less than 1 cent-per-point in value (which is awful). You are able to redeem your points towards merchandise, gift cards, and other items through the bank directly – generally at a rate of 1 cent per point. So a $100 gift card would cost 10,000 points, give or take.
While some people might want to cash out their points for gift cards, it is never good value – you should always be looking to use your points and miles towards their maximum potential, which is redeeming them for international First and Business Class.
Determining Value in a Redemption
How do you exactly determine if it is worth using points for an award ticket? It is quite simple – you start with the value of your points. Let’s continue with our AMEX Membership Rewards example – each point is worth 2 cents.
Let’s say you found a Business Class ticket for 60,000 Aeroplan points from New York to London and would like to book it. As Aeroplan is a transfer partner of American Express Membership Rewards, you can transfer points at a 1:1 ratio, therefore requiring 60,000 AMEX points for this redemption.
value of 60,000 points = $1,200 (60,000 * 0.02)
In this case the value of the points we use is $1,200 and when looking up the cost of our ticket in cash, it is around $5,000 – therefore this would be considered an excellent redemption as you are getting way more value out of your points.
Avoid “Bad” Award Redemptions
Everyone says you should use your points for award tickets – and they’re right. However, there is a clear line between using cash or points for a flight – the value of your points and the cost of a ticket. If you are wanting to redeem your points for an award ticket and you are getting less value from your points, you definitely want to pay cash instead.
For example, let’s say we found a flight from Seattle to San Francisco for 10,000 Aeroplan points (which is 10,000 AMEX points). The value of those AMEX points is $200, using the formula and value of points. However, when we look up the cost of the ticket we want to book, the cash price is just $150.
In this case, we should just pay for the flight using cash because it only costs $150 – and if we were to use points for it, we would be using $200 worth of points (10,000 points) – which would be a bad redemption as the points have more value.
redemptions aren’t equal – find the value first
Use Your Points Wisely
Having miles and points is great – but you shouldn’t spend them all at once just because you have them; saving points when needed is very important – and helps you get closer to your next trip. It is totally okay to mix and match cash and points tickets on your trips – not all flights have to be booked using miles/points.
When planning a trip, remember to research all possible ways to book your flights – both with cash and with miles/points. You will find that different airlines have different redemption options – and it may just be cheaper to book an award flight with a partner airline instead of directly with the airline you’re wanting to fly.
Remember to do the math and work out the value of your redemption based on how much the points you are using are worth and how much the actual ticket costs in cash.
There’s a small twist in all of this, ultimately at the end of the day, your points and your miles are exactly that – yours. If you feel like you want to use points instead of cash on a flight because that’s how you planned your trip, then go ahead – they’re your points and you decide how to use them. Just make sure you aren’t using them for the sake of using points, but rather because the value is decent.
All in All
Travel is not free and neither are miles and points. While you will find travel using miles being advertised as “free” all over the internet, that is not true. There is a value for everything and the miles and points you have are technically assigned a value. Sure, you may have earned the points by making regular purchases you would have anyway, but there will always be some sort of determining factor assigned to those rewards as to if the redemption is worth it or not.
The simplest way to find the value of your points is by running a Google search – different blogs value points differently, but in general, the value doesn’t differ much. Everyone earns and uses points in different ways, so at the end of the day only you are able to make the final call if it is worth using your points on a particular flight or if you should save them for the future.