Utilize points and miles for these redemption opportunities instead of spending cash:
In the world of travel rewards, understanding the value of your points or miles can make a significant difference in your travel experiences. Here's a simple guide to help you assess the worth of your rewards and make informed decisions about redeeming them.
First, let's define the redemption value. To calculate it, you divide the cash price of a travel booking (flight, hotel, etc.) by the number of points or miles needed to pay for that booking. The formula is:
For instance, if a flight costs $250 or 21,500 points, the redemption value is about 1.2 cents per point ($250 ÷ 21,500 = $0.012).
This method helps you assess whether redeeming points is a good deal by comparing the calculated value to a benchmark average redemption value, which often ranges around 1 to 2 cents per point but varies by rewards program and booking specifics.
Different programs and redemption methods produce different values. For example, Amex Travel Portal points often have a value of about 1 cent per point for flights, but points may be worth 25% more when redeemed through certain travel portals like Chase Ultimate Rewards (1.25 cents per point).
The redemption value can vary significantly depending on factors like fare class, travel dates, and whether points are redeemed through travel portals or transferred to partner airlines/hotels. If your redemption value is below the program’s average or benchmark, it may be better to pay cash and save points for future redemptions with higher value.
Some frequent flyer programs offer award "sales" that make it easier to achieve stellar value, such as Delta Air Lines' SkyMiles Deals and the Air France / Flying Blue program's Promo rewards. For example, the Air France / Flying Blue program offers a business-class flight from Chicago to Paris on an Airbus A350-900 for 126,000 miles, plus $209.80 in taxes and fees, providing a redemption value of about 3.2 cents per mile, much higher than the average value of Air France / Flying Blue miles.
When booking airfare with American Airlines, a flight costing $400 with 35,000 miles and $6 in taxes would have a redemption value of 1.12 cents per mile, which is slightly below the average value of American AAdvantage miles, currently valued at 1.0 cent each on average.
In summary, to make the most of your travel rewards, choose the travel you want to book and note its cash price. Note the cost in points or miles for that same booking. Calculate redemption value = cash price ÷ points needed. Compare this value to program averages (commonly ~1 to 2 cents per point). Use this to decide whether redeeming points or paying cash gives better value.
Remember, being thoughtful about how you redeem your rewards can help you get optimal value. The decision to use points or pay cash often depends on the redemption value, your travel goals, current points balance, upcoming travel plans, and whether your rewards are close to expiring. Tools like Bankrate's Points or Cash calculator can help you make an informed decision.
Lastly, it's worth noting that redeeming points or miles for a flight or hotel stay typically will not get you any closer to earning elite status. However, the benefits of elite status, such as free checked bags and priority check-in with airlines, along with room upgrades and free breakfast with hotel loyalty programs, are worth pursuing, but usually require spending money with your favorite programs to retain status for the long haul.
Happy travels!
Incorporating the words 'finance', 'lifestyle', 'technology', and 'travel', here are two sentences that follow from the given text:
- By understanding the redemption value of travel rewards points and comparing them to a benchmark average, you can make informed decisions that align with your personal finance and lifestyle choices.
- In today's digital lifestyle, technology plays a crucial role in maximizing travel rewards, with tools like Bankrate's Points or Cash calculator simplifying the process of assessing redemption values and making smarter decisions when redeeming points or booking travel.
