When I first started in the miles and points world back in 2013, it seemed like everyone online writing about travel rewards focused on using their points for flying first class and staying in five-star hotels.
It’s fun to read about those kinds of travels, but it’s just not how my family (or anyone I know) typically travels. In fact, that was the whole reason I started writing online — to tell people that it was OK to drive to your family vacation and use your miles and points to stay at the Holiday Inn Express.
How much are points worth?
To get a sense of what redemptions are “best” for you, it’s first necessary to take stock of how to determine the value of your points.
That can be hard to do because value varies by program. A United MileagePlus mile is not worth the same as a Marriott Bonvoy point, which is not the same as a Capital One Venture mile.
A good rule of thumb is to calculate the cents-per-point value of a specific redemption. Looking for a stay at the Intercontinental Magnificent Mile in Chicago? Compare the cash price to the points price.
So take the cash price of $307 with taxes and fees and divide it by the points cost (50,000 IHG points in this case). You will come up with a redemption value of 0.61 cent per point.
A common example of point valuation
I often see people talk about their award redemptions by comparing the amount of miles and points they used to the cash price of the same or similar flights. This happens especially on premium cabins like business and first class. I’ve done this myself — it’s a fun way to think about redeeming your miles and points.
For example, my wife and I took a first class trip to Asia back in 2016. Our routing was Cincinnati to Chicago-O’Hare to Tokyo-Narita to Hong Kong to Singapore, all on one ticket, booked with 62,500 American AAdvantage miles per person.
When I looked up the cash prices of our ticket, I couldn’t find a way to price out the entire itinerary, so I had to split it into two fares, which came to a total of $16,837.
The total cost, $16,837, divided by 62,500 miles represents a “value’ of 26.9 cents per mile. Except it’s not a fair comparison. Few people would pay more than $16,000 for a flight from the U.S. to Asia.
If that’s where you want to go and how you want to use your miles and points, then by all means don’t let me talk you out of it. But let me give you another option for how to best use your miles and points.
» Learn more: How to use travel rewards to afford first class
Here’s the ‘best’ use of your miles and points
The best use of your miles and points is the one that gets you where you want to go, when you want to go there, for the least amount of money out of pocket. We know miles and points are a deflationary currency, so there is a real cost to holding on to them. You never know when that big trip you’ve had your eye on will suddenly go up in cost.
» Learn More: Find the best airline credit card for you
By all means, if you have a premium cabin redemption that you have your eye on, don’t let me talk you out of it. But as easy as it is to get miles and points (whether that’s through credit card welcome bonuses or other spending), don’t be afraid to use your points to simply help you get where you want to go on your next trip.
How to maximize your rewardsYou want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
- Airline miles and a large bonus: The Chase Sapphire Preferred® Card
- No annual fee: The Wells Fargo Propel American Express® card
- Flat-rate rewards with no annual fee: The Bank of America® Travel Rewards credit card
- Premium travel rewards: The Chase Sapphire Reserve®
- Luxury perks: The Platinum Card® from American Express
- Business travelers: The Ink Business Preferred® Credit Card
Planning a trip? Check out these articles for more inspiration and advice:
Find the best travel credit card for you
How to save money on international flights
Earn more points and miles with these 6 strategies