How to Calculate the Value of a Point (And Why It Matters)
When it comes to points and miles, not all are created equal. Knowing how to calculate the value of a point can help you decide whether you’re getting a great deal on a redemption or if you’re better off saving those points for something else. Let’s break it down in simple terms so you can make the most of your rewards.
Why Should You Calculate Point Value?
Every rewards program assigns a different value to its points or miles. For example:
1,000 Chase Ultimate Rewards points can often be worth more than 1,000 Marriott Bonvoy points.
A flight might give you far better value than redeeming those same points for a gift card.
Calculating the value of a point helps you figure out whether a redemption is worth it or if you’d get more value using another method.
The Simple Formula to Calculate Point Value
To determine how much a point is worth, use this straightforward formula:
Point Value (Cents Per Point) = Cash Price ÷ Points Cost
Example:
A flight costs $500 in cash or 50,000 points.
$500 ÷ 50,000 points = 0.01, or 1 cent per point.
This means you’re getting 1 cent of value for each point. If the value feels low (like under 1 cent per point), it might not be the best use of your points.
What’s a “Good” Value?
Here’s a quick guide for what’s generally considered good value for different types of points:
Anything above the average value is typically considered a good redemption.
Examples of Point Value Calculations
Let’s look at a few real-world examples:
Flight Redemption (American Express to Flying Blue)
Flight: Economy round-trip to Europe.
Cash price: $800.
Points cost: 50,000 Flying Blue miles.
Value: $800 ÷ 50,000 = 1.6 cents per point.
Verdict: This is a good value for Flying Blue miles, which are often worth about 1.3 cents each.
Hotel Redemption (Marriott Bonvoy)
Hotel: 1 night at a Marriott property.
Cash price: $300 per night.
Points cost: 50,000 points.
Value: $300 ÷ 50,000 = 0.6 cents per point.
Verdict: This is below the average value for Marriott points (0.8 cents), so it might not be the best use of points.
Gift Card Redemption
Gift card: $50 for Amazon.
Points cost: 5,000 points.
Value: $50 ÷ 5,000 = 1 cent per point.
Verdict: This is decent but doesn’t maximize value compared to redeeming points for travel.
How to Improve Your Point Value
Transfer to Travel Partners
Points often stretch further when transferred to airline or hotel programs. For example, Chase Ultimate Rewards points are worth 1.25-1.5 cents in the travel portal but can be worth 2+ cents when transferred to partners like Hyatt or United.
Look for Sweet Spots
Many programs have sweet spots, like short-haul flights with British Airways Avios or Hyatt stays in low-category properties.
Factor in Transfer Bonuses
If a program offers a transfer bonus (e.g., 20% extra points to a partner), it can significantly boost the value of your points.
Avoid Low-Value Redemptions
Using points for things like merchandise, cash back, or gift cards often provides poor value (less than 1 cent per point).
Final Thoughts
Calculating the value of a point might seem like extra work, but it makes a huge difference when it comes to maximizing your rewards. By doing the math, you can make informed decisions, avoid low-value redemptions, and get the most out of your hard-earned points.
