My Relaxed Valuation of Points and Miles

I’ve been asked to come up with my values for each of the types of points and miles we strive so hard to collect. I know some of my fellow hobbyists can quote you values down to the tenth of 1 cent and clearly explain and justify why “X” point is worth _ and “Y” point is worth just a little bit more. I like to look at miles and points as a way to obtain experiences and not have to pay cash out of pocket. If I accomplish that simple goal, I’ve won.

That being said, though I certainly understand that we should be earning and obtaining points at a price per point far below any reasonable redemption gives us.

There certainly is validity to the notion that every good points collector has the opportunity on any credit card transaction to earn 2% cashback from a simple cash back card. And that leads many to value a transaction as a loss if they don’t earn at least 2%. I never worry about that though as every new card welcome or sign up bonus I do earns points at a far higher rate than 2%. A recent sign up I got was 60,000 points for $1000 of spending or 60X per $. The card had an annual fee of $159 but dividing that by 60K only represented a little over 1/4 cent per point. I don’t know of a way you can redeem points that low.

And every credit card transaction I do is structured to take advantage of bonus categories. I buy groceries with a card that pay at least 3 points per dollar, gas 3 points per dollar, dining 5 points per dollar and 5x on travel as well.  If the transaction doesn’t count as a bonus category, I’m earning at least 2 Membership Rewards points per dollar with an Amex Business Blue card or 2.625% cashback with a Bank of American Travel Rewards card.

So for me, the real issue is: “Do I want to pay cash out of pocket for this expense or can I cover it and get a reasonable value using points?”

I’ve only got 3 levels of value for points and miles

1. .5 cents for Hilton   (And I just did a redemption at.4 cents as I didn’t want to go out of pocket for $2000+

2. 1 cent for airline miles domestic. I won’t pay 25k miles for a $200 domestic ticket but will gladly pay almost anything they want for a first-class long haul lie-flat seat, as long as I’m getting at least 1 cent value from that mile I acquired for almost nothing

3. 1.25 cents per point for flexible bank program points like Ultimate Rewards, Membership Rewards and Thank You points that I again acquired for virtually nothing. The added value is in the multitude of uses available and numerous transfer partners.

I learned from my old buddy Ray that life is just too short to get hung up on tenths of a cent.  If you’ve got the points, you can always get more. And that’s after many years of playing this game. You can always get more. But once you pay with cash, that money is gone forever and it is a much more diversified avenue of payment that our points and miles.

Source: frugal travel guy

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.