Smart Money Podcast: ‘This or That’: Booking With Points vs. Cash

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Written by Sean Pyles
Senior Writer
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Edited by Kathy Hinson
Lead Assigning Editor
Fact Checked
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Co-written by Meghan Coyle
Assistant Assigning Editor

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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode is part of our new series called “This or That,” where the NerdWallet Travel team compares different ways to travel.

Check out this episode on any of these platforms:

Our take

If you have a lot of credit card points, airline miles or hotel points, you might be weighing whether to redeem your points or pay in cash for your next trip. One of the biggest mistakes is to save your points indefinitely. Hoarding points is a bad strategy because airline miles and hotel points generally devalue over time as loyalty programs gradually increase the number of points it takes to book a flight or hotel night.

As soon as you have enough points for award travel, you should calculate the redemption value by dividing the cash price by the points price or use a calculator. That will give you a cent-per-point value of your redemption. Then compare it with NerdWallet’s baseline values of how much each point should be worth.

If your redemption value is the same or higher, you are getting a good deal for your points. Also, note that you may be able to transfer your credit card points to an airline or hotel loyalty program and spend fewer points using that program than you would booking through the credit card’s travel portal. You might want to consult another calculator to help you figure out this step.

On the other hand, if the redemption rate you calculate is low, pay with cash instead if you can afford it without going into debt. Paying with cash has several advantages, including allowing you to earn elite status credits and more points on your booking. You should also pay with cash if you are trying to meet the spending requirement for a credit card sign-up bonus.

Our tips

  1. Always calculate the cent-per-point value of your redemption. If a flight costs $500 or 50,000 points, divide $500 by 50,000. Then compare that value with NerdWallet’s baseline values of how much your points are worth. If your redemption value is higher, book it!

  2. Check whether transfer partners have a better redemption value. If you have a travel credit card or are considering getting one, check whether you have opportunities to book with a transfer partner for fewer points instead of booking through the credit card’s travel portal.

  3. You don’t want to hoard points. Earn them and then use them as soon as you can before your points devalue.

More about points and miles on NerdWallet:

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Sean Pyles: You have a trip coming up and are sitting on a pile of points. Should you use them to book your travel, or are you better off using cash instead? Welcome to the NerdWallet Smart Money podcast, where you send us your money questions and we answer them with the help of our genius Nerds.

I'm Sean Pyles. In this episode of our "This or That" travel series, we're examining paying with points. More specifically, when should you redeem your points? Should you pay with cash most of the time and save your points for a big redemption? Or should you just use your points on your next trip, even if it's not very expensive?

Here to tell us about it is Meghan Coyle. Meghan is an editor on NerdWallet’s Travel team, and she's one of the people who helps crunch the numbers on how much your points are worth. Meghan, welcome to Smart Money.

Meghan Coyle: Thanks for having me, Sean.

Sean Pyles: So to start off, let's be really specific about what kinds of points we're talking about here. Travelers can use airline points to book a free flight or hotel points to book a free hotel stay. They can also use credit card points to book both flights and hotels.

So when people are trying to decide whether to use points or cash to book, is the calculation different for different types of points?

Meghan Coyle: That's a great question, Sean. There are so many different types of travel rewards out there. The good news is that the method for deciding between points and cash is the same no matter which type of points you're talking about, but the actual value of the points is different.

So, for example, hotel points usually aren't worth the same amount as airline miles. And even within hotels, certain hotel brands have points that are worth different amounts. So it can get complicated really fast.

Points are a currency. So basically, what we're trying to do is convert them into the same currency as cash to determine which is better. It's like you can't compare apples and oranges, so we need two apples or two oranges.

Sean Pyles: So you try to boil them down into U.S. dollars.

Meghan Coyle: Exactly. So the simplest way to do this is take the cash price and divide it by the number of points it would take to book the same reservation.

Sean Pyles: OK. And for those of us like me who aren't fond of doing math like this, you have done a lot of this math already, correct?

Meghan Coyle: Yes.

Sean Pyles: So based on what you've discovered, how can people determine whether the point value is good? Is half a cent per point good? Is it 1 cent per point common or is that better? What do you think?

Meghan Coyle: Yeah, so NerdWallet publishes a list every year of how much your points are worth. Basically, my team looks at thousands of flights and hotel stays, and we do that math, that calculation I was just talking about. And we come up with a baseline value, which is how much a point is worth in dollars.

But let's be real here — they're not worth that much. It's usually some amount of cents, maybe even less than 1 cent. So basically, every time you look for a flight or a hotel stay, you have to take the price you would pay in cash and divide it by the number of points and then you'll get this value.

If it is more than baseline value, then you should book it. That means you got a great deal. But if it's less, then you should probably pay with cash.

Sean Pyles: And we have a calculator that can help people determine this as well, correct?

Meghan Coyle: Yeah, totally. You do not have to do all this math yourself. I use the calculator all the time.

Sean Pyles: We will link to that in our show notes post. Folks can find that at

Well, you've been collecting data on points and their values for a few years now. Have you noticed any patterns in how much points and flights are worth and when people should use one versus another?

Meghan Coyle: Yeah. Expensive redemptions often offer higher value. So that's why people often advise booking business class flights because your points are worth so much when you do that. That's true, but if you don't fly business class a lot or that's too many points, that still might not be the right booking option for you.

Another important point is that points generally devalue every year. Basically, every program gradually raises award prices. And so a flight that costs 10,000 miles one year might cost like 11 or 12,000 the next year. And so it goes up, and up, and up.

Sean Pyles: So inflation is not limited to the grocery store; it's also coming for your flights and points as well.

Meghan Coyle: Exactly. So it's usually a good strategy to use your points as soon as you have enough for a trip you're going to take soon. Because if you sit on a big stack of points, those will become worth less and less. Imagine you're sitting on a pillow, and the pillow just starts deflating. That's basically what's happening to your points.

Sean Pyles: And so you said it's good to use them once you have enough. I'm wondering how people can determine what enough is. Is that just the flight that they want to take this spring break potentially, or is that going to be a flight in six months from now? How do you think people can determine what that means for them?

Meghan Coyle: Totally. It's kind of up to you. But I would say if there is an upcoming trip you have within the next year, and it costs 30,000 points, then I wouldn't try to keep earning much more than that. I've heard of people having a million points in the bank and no plan to use it. Right?

Sean Pyles: Yeah.

Meghan Coyle: So that's what you want to avoid.

Sean Pyles: All right. So you mentioned that the value points can erode over time, the way that the power of the dollar is eroding amid inflation. But inflation has actually had a kind of positive effect on points and made them better for booking in the past year or so, is that right?

Meghan Coyle: Yeah. I mean, we all need some good news out of all the inflation data coming out, and here it is. Flight prices are up more than 25% year over year if you're looking at December prices.

And so you might find that you are getting better redemptions that are over that baseline value we were talking about because the prices are just so expensive in cash, and the points price hasn't risen as much as the inflation.

Sean Pyles: OK. One thing I'm curious about is that different airlines and hotels have very different valuations, and some are pretty high-value. Can you talk about which ones are maybe better than others?

Meghan Coyle: Yeah, so some of the international airlines did really well in our analysis. I know as you know, U.S.-based travelers, you're thinking United, American, Delta, maybe Alaska. But you really shouldn't miss out on some of these international airlines that have points that are worth a lot. For example, Air Canada. Air Canada is part of the Star Alliance, so you can actually book United flights with your Air Canada Miles.

Sean Pyles: That's pretty handy. As I was hearing you say that, I was thinking, "I typically fly out of Portland. I'm not sure if Air Canada flies through there that much." So it's nice that they're at least partnered with other airlines, so you could use them on, as you said, United.

Meghan Coyle: Totally, or any other international airline in their alliance or any of their other partners. So you actually have a lot of options.

Sean Pyles: OK. Are there any other standout point systems that folks should know about?

Meghan Coyle: Yes, one of my favorites is Hyatt. They are a transfer partner of Chase, and their points are worth a whopping 2.8 cents per point. If you compare that to all the other hotel loyalty programs like Marriott and Hilton, which are worth like 0.7 cents or is 0.5 cents in Hilton's case, 2.8 cents per point is a great value. And much higher than what you might get if you book through the Chase travel portal.

Sean Pyles: Yeah, that's pretty sweet. And are Hyatt points flexible as well, meaning that you can use them for other hotels or other fun things like that?

Meghan Coyle: So Hyatt's got a lot of different brands under them. So they've got Hyatt Place, some of their all-inclusive resorts. They have opened a few of those in the past few years.

So there are a lot of different hotels, but I should mention that Hyatt is also the smallest hotel program. They don't have nearly as many hotels as Marriott, so they are a bit limiting in that way.

Sean Pyles: So maybe they're higher value as a way to entice people to use them versus a larger chain.

Meghan Coyle: Right.

Sean Pyles: Well, for U.S.-based travelers who maybe aren't going abroad very often, what would be the best way for them to earn something like Air Canada Miles? Do they have to fly a lot internationally, or can they just fly domestically?

Meghan Coyle: Yeah, so that's where a lot of travel credit cards come in. Most of the major credit card rewards programs like Chase, Amex, Capital One, Citi, they all have transfer partners. Those are usually airline or hotel programs that you can transfer your credit card points to. And that's where this math gets really tricky because those credit card programs also all have a travel portal.

So let's say you have a Chase Sapphire card — you could use those points that you earned with Chase and just book directly in their little portal, in the app or on the website. But when you use your points that way, they're only worth maybe 1 cent. If you have a Sapphire, they might be worth 1.25 or 1.5 cents each.

So you're like, "Oh, that's pretty good." But if you transfer your Chase points to Air Canada, then they're more likely worth about 1.9 cents. So you can see how it kind of compounds if you know the right way to book.

Sean Pyles: Yeah, you have to know how to game the system a little bit.

One quick disclaimer: NerdWallet is partners with those various banks that Meghan just mentioned, but that does not affect how we talk about them.

OK, well back to the should you pay with cash or points calculation. It's not as simple as, should you just pay with points or cash. It's, should you pay with credit card points, or hotel points, or airline points, or cash, right? There's a lot of different things to factor and calculate and compare all at once.

Meghan Coyle: Yeah. Honestly, it's a lot of work. That's why we do all this work. I usually recommend that people who are trying to go on a trip where they already have a destination in mind, just look up an article about, what are the best ways to use certain miles, or what is the best way to get to Japan, or to New York with miles and see what comes up. Because a lot of people have already done the legwork for you.

Sean Pyles: Right. While some people like you are very into gaming the system, getting tons of points and even trying to earn elite status. Can you explain what it means to earn elite status and how that may come into the decision of whether to pay with points or cash?

Meghan Coyle: Yeah, so earning elite status can get you all sorts of perks on an airline if you are loyal with them. It could also do the same for hotels.

I would say the biggest perk is getting an upgrade. You might hear about people, oh, they got upgraded to business class and all they paid for was an economy seat in the back of the plane. So that's why people try to earn elite status.

And the problem is if you pay with points, most of the time you won't be getting those elite status credits. So those are the things you need to collect in order to earn elite status for the next year. So that only applies if you're using airline miles or hotel points, but there are ways around that.

For example, some credit cards offer elite status earning or fast tracking to elite status as a benefit of the card. So you might want to prioritize hitting that minimum before you start paying with points for your next trip.

Sean Pyles: Well, Meghan, I have to say I am a fairly lazy traveler. I have a cash-back credit card that I use for pretty much everything, and I don't dabble too much in the airline points game. I would love to hear how you approach booking a trip when you do have some points or maybe you are an elite status member. How do you do it personally?

Meghan Coyle: Well, I do that calculation I was talking about. I look up how much it would cost in points with my preferred airline. I have elite status with one, so first I look up there. And I'll compare it to the cash price, and I'll usually use those miles to book a flight. And I basically keep my credit card points in a major credit card rewards program, and I will transfer those if I ever want to book anything.

I basically never book anything in the travel portal. Because after all the research I've done, that's generally not the best way to get the most value out of your points. But I know it's easier for some people.

Sean Pyles: Yeah. How long does all of that take you?

Meghan Coyle: Oh, man. It can take a while. I would say I probably look up maybe three or four flights every time I'm about to book. So I'm doing that calculation several times. But like I said, the easiest way to save time on all of this is to just look up what are some of the best ways to travel to certain places with your points and miles. And that way, you can just piggyback off of other research without having to do it yourself.

Sean Pyles: Yeah. It also makes me think about how, when people are doing the cash versus points calculation, it helps to know yourself a little bit, too. Like I mentioned, I'm just straight up too lazy to do all of those things that you just described doing, and I'm happy to get a decent amount of cash back on my credit card just by buying my flights through that.

But you know what to do, you know how to earn points really well and use them to their greatest potential. And so for you, all of this work is absolutely worth it, right?

Meghan Coyle: Totally. I mean, I've saved thousands of dollars and thousands of points by doing all of this work. But definitely don't discount your strategy, either. At least you're using your points, so that's the most important thing. Every time anyone asks me what's the best way to use it, I'm like, “As long as you're using them, that's all that matters, really.”

Sean Pyles: Right.

Meghan Coyle: I mean, after all, these are essentially almost free flights and hotel stays that you otherwise would've had to pay for.

Sean Pyles: One thing people might also want to think about is the fact that beyond points depreciating in value, some of them can also expire. Can you talk about how points do expire? Because that can really catch people by surprise.

Meghan Coyle: For sure. Every hotel and airline has their own rules around when points expire. Some of them don't expire at all anymore, which is amazing.

But generally the rule of thumb is that you need to have some activity in your account in a certain period of time, like a year, maybe 24 months, some amount of time that you've traveled and used that loyalty program.

But “using that loyalty program” is such a broad term. There's a lot of different activities you can do to keep your account active. For example, you can buy something through their shopping portal, like all the major airlines have a shopping portal where you can literally buy a Nike T-shirt or shoes or something. And if you buy it through the portal, you earn a few miles along with your purchase.

So that's one way to keep it active. Using the credit card, actually traveling with any of those companies. There's a lot of things you can do. So try your very hardest not to let them expire.

Sean Pyles: OK, great.

Meghan, a lot of people are big fans of credit card sign-up bonuses, and for a lot of folks, that can be their best single shot at getting an absolute boatload of points. How do you think that factors into whether someone should use points or cash?

To me, it seems like once you get that sign-up bonus, it's a no-brainer. You better use that for a trip as soon as you can.

Meghan Coyle: Totally. This is one of those places where it really does help to know how much your points are worth. So you can actually compare credit card offers that way.

For example, if you're like, “Wow, that credit card has a sign-up bonus of 100,000 points.” And then you look up the value, and you're like, “Oh, these points are worth half a cent; that's only worth $500. Whereas I could get another travel credit card, and maybe you only get 80,000 points, but that's worth more than $1,000 of travel.” So that's where you really want to do the math before getting a card.

And then exactly like you said, you should really prioritize earning the bonus because those points are worth so much. Once you know that they're worth $1,000, you're going to try a lot harder to hit the spending minimum and get that, you don't want to miss that huge chunk of points. Because often in the span of having a credit card like that, usually the biggest chunk of points that you'll earn all at once is in that sign-up bonus. So you really don't want to miss that earning opportunity.

Sean Pyles: Yeah. Well, I do have to say as a former debt writer at NerdWallet, that if you are using one of these credit cards that gives you a ton of points, and maybe has a lucrative sign-up bonus, you better make sure that you're paying off your balance monthly because the interest on these credit cards tends to be quite high. And that can pretty much erode any value that you would get from one of these bonuses. And that's not even to mention annual fees that these cards can have.

Meghan Coyle: Yeah, that's a really good point, Sean. Especially when you're thinking about, “Oh, should I spend $1,000 on something?” But then when you know how much the points are worth, you're like, “Do I need to spend $1,000 to get 10 points?” If you can't really afford $1,000, it helps you budget that way, I would say, too.

Sean Pyles: Well, Meghan, do you have any other thoughts that folks keep in mind when they're deciding whether to use points or cash on a trip?

Meghan Coyle: The No. 1 thing I'll say is that there's no right way to use your points. Again, it's more important to keep using them so your pillow doesn't deflate, and have fun. These are trips, and they're for you.

Sean Pyles: Yeah. Well, can you please give us your takeaway tips?

Meghan Coyle: Sure. So first, always calculate the cent-per-point value of your redemption. If a flight costs $500 or 50,000 points, you want to divide that 500 by 50,000, then compare that value to NerdWallet's baseline value of how much your points are worth. If the redemption is higher, book it.

Second, turns out there's a ton of different point currencies. If you have a travel credit card or are considering getting one, look for opportunities to book with a transfer partner, maybe an international one, for less points.

And lastly, you don't want to hoard points. Earn them and then use them as soon as you can before your points devalue.

Sean Pyles: Great. Thank you so much for talking with me, Meghan.

Meghan Coyle: Thanks for having me, Sean.

Sean Pyles: That is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD.

You can also email us at [email protected]. Visit for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast.

This episode was produced by Meghan Coyle. We had editing help from Tess Vigeland. Kaely Monahan mixed our audio. And a big thank-you to the pros on the NerdWallet copy desk.

Here is our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until the next time, turn to the Nerds.