Redeeming points and miles instead of paying cash on these 5 occasions
Maximising Travel Rewards: A Simple Guide
Travelling can be an exciting experience, and using travel rewards can make it even more affordable and convenient. Here's a straightforward guide on how to get the most value from your travel credit card rewards.
When deciding between using points or cash for your travel plans, consider factors such as your current points balance, upcoming trips, and the expiration date of your rewards. If your rewards are about to expire, it might be a good idea to use them before they lapse. Most airline rewards programs will let your rewards lapse if you don't "earn or burn" some of your rewards every 12 to 24 months.
If a flight or hotel stay is discounted or part of a promotion, paying cash might be the smarter move. However, if the redemption value is 1 cent per point or more, it can make sense to redeem rewards. For instance, an example of a premium cabin airfare booking with Flying Blue is a business-class flight from Chicago to Paris for 126,000 Flying Blue miles plus $209.80 in taxes and fees. Redeeming points or miles for premium cabin airfare or during award sales can provide a good redemption value.
To calculate the average redemption value of travel credit card rewards, divide the cash price of a specific flight or hotel stay by the number of points or miles required for that booking. This will give you the value per point or mile in cents. For example, a $250 flight costing 20,000 miles provides a redemption value of 1.25 cents per mile. Airline miles typically average around 1 to 2 cents per mile, with some programs offering higher value, especially when redeemed for premium cabin flights.
Hotel points generally have a lower average value, often around 0.6 cents per point. However, this varies widely depending on the hotel brand, location, and timing.
Being thoughtful about how you redeem your rewards can help you get optimal value and make travel more affordable, comfortable, and convenient. Families often book airfare with points or miles and pay cash for hotels, or vice versa. Some frequent flyer programs offer award "sales" like Delta Air Lines' SkyMiles Deals and Air France / Flying Blue's Promo rewards.
Using the best rewards credit cards can help stretch your points and miles further. For example, American AAdvantage miles are worth 1.0 cent each on average, according to recent valuations. Air France / Flying Blue miles can be easily accrued through partnerships with American Express Membership Rewards, Chase Ultimate Rewards, and Capital One miles.
In summary, to evaluate the worth of travel rewards redemptions across airlines and hotels:
- Find the cash rate for a flight or hotel stay.
- Note how many points or miles are needed.
- Divide cash cost by points required to get redemption value.
- Compare to average redemption values (about 1-2 cents for airlines, ~0.6 cents for hotels).
- Use this to judge if using points is a good deal for your intended booking.
This method provides a clear, numeric basis for evaluating the worth of travel rewards redemptions across airlines and hotels. Booking airfare in a premium cabin can provide outsized value for your rewards, especially for international trips. Using rewards instead of paying cash for travel can be beneficial if you're not interested in earning elite status. For instance, a one-way economy flight from Chicago to Toulouse, France in November 2024 is available for 15,000 miles plus $110.40 in airline taxes and fees.
Integratingtechnology into your travel planning can help maximize your lifestyle by making the most of your travel rewards. For example, using a travel app can aid in tracking your points balance, upcoming trips, and expiration dates, ensuring you don't miss out on using your rewards before they lapse.
Moreover, staying updated on technology trends in finance, such as travel credit card promotions, award sales, and partnerships with other financial institutions, can help you accrue more travel rewards, leading to even more affordable and luxurious travel experiences. In the example provided earlier, using Air France / Flying Blue miles accrued through partnerships with American Express Membership Rewards, Chase Ultimate Rewards, and Capital One miles for a business-class flight from Chicago to Paris would be facilitated through such technological advancements.
